File Name: ORAL REPORT FROM PHCD ON STATUS OF 1.5 RATIO
Agenda Item Number:
ORAL REPORT FROM PHCD ON STATUS OF 1.5 RATIO
Audrey M. Edmonson, Prime Sponsor
Health & Social Services Committee
Mr. Greg Fortner, Director, Public Housing and Community Development Department (PHCD), informed the Committee members that the United States Department of Housing and Urban Development (HUD) allocated Community Development Block Grant program (CDBG) funds to the County on a 1.5 ratio, and required that only a certain amount remain in its line of credit. He explained that in previous years this translated into a line of credit which equaled the amount of the allocation for the year plus half of that allocation. He indicated that in 2012 the County was allocated $10 million, and its line of credit amounted to $15 million. He said that the department received a letter from HUD informing staff that the County’s line of credit had exceeded the amount allowed by $13 million; and that HUD would recapture these funds unless the department was able to explain why this amount was in the County’s line of credit. Mr. Fortner said that he and his staff met with HUD representatives and explained that the funds had accumulated because the 2010 federal budget was only adopted in April 2011; therefore, the County received its funds late. Furthermore, in 2012, the federal government did not release the funds until September. As a result of this meeting, Mr. Fortner stated, he and his staff were able to agree on a plan with HUD. He noted the department had received a letter from HUD indicating that it would receive $11 million in CDBG funding this year; and there was approximately $24-25 million in that account presently.
Mr. Fortner pointed out that the City of Miami lost 12 percent of its allocation because it had not met HUD’s ratio over the last couple of years, and he wanted to ensure that this would not happen to the County. He indicated that at the next Committee meeting, the department would present an item to recapture $6-8 million from County departments and municipalities that would not be able to spend the funds by November 1st; and the recaptured funds would be re-allocated to projects for which the funds would be spent within that timeframe. He noted in some ways this would be beneficial for the County because the department intended to use the recaptured CDBG funds for projects that were supposed to be undertaken with Surtax funds, and this would free up the Surtax funds for other affordable housing projects, and demolition projects.
In response to Chairwoman Edmonson’s question, Mr. Fortner confirmed that the recapture of $6-8 million would be sufficient to bring the County’s line of credit within the 1.5 ratio if the current projects progressed as scheduled.
Pursuant to Chairwoman Edmonson’s question, Mr. Fortner indicated that the 12 percent taken from the City of Miami amounted to $600,000.
Commissioner Monestime said he was pleased that Mr. Fortner was taking action pro-actively to ensure that the County would not have to return the CDBG funds. He asked about the criteria that the department used to determine which funds to recapture, noting in the past he had received complaints regarding recaptured funds.
Mr. Fortner explained that if the County had awarded a contract, but the funds had not been spent within the prescribed timeframe, the department would recapture the funds. He added that if funds had been allocated, but a contract had not yet been signed, those funds would be subject to recapture, as well. He noted in the present recapture, the department would only recapture funds that would not be spent by November 1st, and indicated that the funds would be reallocated in a future CDBG allocation if the projects were on-going.
Referring to Mr. Fortner’s explanation that allocated funds would be recaptured if the contract had not yet been signed; Chairwoman Edmonson asked what would prevent a vendor from signing a contract.
Mr. Fortner indicated that a number of reasons could explain why a contract had not been signed: sometimes it was not possible for a vendor to meet the insurance requirements; some vendors did not agree with the conditions in the CDBG contract; and some vendors wanted to change the scope of activities.
In response to Chairwoman Edmonson’s question as to whether the vendors were informed of the CDBG conditions when they responded to a Request for Proposals (RFP), Mr. Fortner noted the process was somewhat dysfunctional because the department put out a RFP, received applications and allocated funds, which HUD only sent later in the year. For example, explained Mr. Fortner, if a recapture allocation was approved by the Commission in January, the department may not receive the funds in its line of credit until September. He noted this put the vendors in a precarious situation, as they had to pre-finance their activities, because the funds were only sent by the federal government later in the year. He said that in the past the department used to wait to receive the funds from HUD to start the process, but this did not give the vendors sufficient time to carry out their projects. Therefore, he indicated, the department fast-forwarded the process, had he contract signed, and had the vendors begin the projects until the funds were received, and the vendors were reimbursed.
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