M&C Review


COUNCIL ACTION:  Approved on 6/11/2019 - Ordinance No. 23687-06-2019

DATE: 6/11/2019 REFERENCE NO.: **G-19551 LOG NAME: 19SECTION 108 LOAN FUND APPRORIATION CLEANUP/CONVERSION
CODE: G TYPE: CONSENT PUBLIC HEARING: NO
SUBJECT:   Adopt Appropriation Ordinance Correcting Certain Financial Accounts by Increasing the Estimated Receipts and Appropriations in the HUD Section 108 Loan Fund in the Amount of $28,539,931.80 (COUNCIL DISTRICTS 2 and 8)

RECOMMENDATION:

It is recommended that the City Council adopt the attached Appropriation Ordinance increasing the estimated receipts and appropriations in the HUD Section 108 Loan Fund (30107) up to $28,539,931.80 for appropriations in a total amount of $38,180,494.95 consisting of up to $8,811,256.73 in the Minyard Section 108 loan project, up to $2,404,908.33 in the Trinity River Master Plan, up to $7,525,315.28 in the Mercado Section 108 loan project, up to $10,498,451.46 in the Evans/Rosedale Section 108 loan project, up to $3,311,431.82 in the United Community Centers Bethlehem Center Section 108 project, and up to $4,934,984.33 in the Shamblee Library Section 108 project.

 
DISCUSSION:

The Neighborhood Services Department is requesting that an appropriation ordinance be adopted in various projects in the HUD Section 108 Loan Fund (30107) to properly record revenue received along with interest earned or anticipated interest earned and future debt service payments related to various projects funded by the United States Department of Housing and Urban Development (HUD).  These appropriations were not originally created in the MARS financial system and the corrections listed below are needed to allow for future debt service transactions and to clean up the previous financial transactions that were converted into the PeopleSoft Financial System. The corrections will allow four projects to be closed and properly record appropriations in the active projects. This M&C does not approve any further project expenditures with the exception of the Evans/Rosedale debt payments.

Section 108 of the Housing and Community Development Act of 1974 (Section 108) provides funds for loan guarantees as part of HUD's Community Development Block Grant (CDBG) program.  The Section 108 Loan Guarantee Program provides communities with a source of financing for economic development, housing rehabilitation, public facilities, and other physical development projects including improvements to increase a project's resilience against natural disasters.  The funds can be used by a designated public entity to undertake eligible projects or can loaned to a third party developer to undertake eligible projects.

The adjustments in the Section 108 Loan Fund appropriations are shown in the attached table.  The history of each project is described below.

MINYARD SECTION 108 LOAN: B01000
On April 8, 1997, the City Council authorized an application to HUD for a Section 108 Loan Guarantee in the amount of $6.6 million for the Southeast Center Minyard Development Project (M&C G-11856).  On August 19, 1997 and October 7, 1997, the City Council authorized contracts with Fort Worth Local Development Corporation (LDC) for the Minyard project utilizing the Section 108 Loan Guarantee and other permanent financing options. This project is located in Fort Worth Reinvestment Zone Number 28 (M&C C-16239 and M&C C-16344).

The City has fulfilled its Section 108 obligations for this project and the appropriation request of $8,811,256.73 will allow the project to be closed out in PeopleSoft. Actual revenue and expenditures are in balance as these have been received and recorded.

TRINITY RIVER MASTER PLAN: B03000
On June 3, 2003, the City Council adopted the Trinity River Vision Master Plan (M&C G-13989).  The revenue and expenditures are in balance but this project did not have appropriations recorded in the MARS financial system. This appropriation request of $2,404,908.33 will allow the project to be closed out in PeopleSoft.

MERCADO SECTION 108 LOAN: B02000
On April 8, 1997, the City Council authorized an application to HUD for a Section 108 Loan Guarantee in the amount of $5 million for the North Main Mercado project (M&C G-11857).  On March 11, 1998, HUD announced that it had approved the City's application. The Section 108 Loan Guarantee allowed low interest loan funds to be made available to eligible owners of commercial property located in and around the 1400 block of North Main Street for the Mercado project. On August 29, 2000, the City Council authorized the expansion of the Mercado project to allow current property owners, nonprofits, and those acquiring property in and around the 1400 block of North Main Street, to apply for funds to finance acquisition, new construction and rehabilitation of existing buildings which could be used  buildings for commercial and economic development activities or nonprofit operations.

In September 2001, the City and Fort Worth Mercado 1, L.P. began discussion regarding the development of a "Mercado" style building in the 1500 block of North Main Street. An agreement to construct the building was finalized in August 2003, and work began in October 2003. In February 2004, the developer informed the City that it was not able to secure a loan to complete the project. On August 31, 2004, the City Council accepted an assignment of the developer's construction contract with Muckleroy & Falls for the project.  The LDC provided funding of $1.3 million to complete the 58,000 square foot building (M&C C-20251).

On January 10, 2006, the City Council authorized the sale of the Mercado to 11211 Katy Freeway, L.P. for $2.5 million (M& C L-14158). The sales proceeds were deposited into a Wells Fargo Bank account to use for future debt service payments. The last debt service payment of $265,000 to HUD for the project was made on July 31, 2017. The City has fulfilled its HUD Section 108 obligation and the remaining $169,575.71 was returned to the City on March 22, 2018 as CDBG program income in accordance with HUD regulations. This property is located in COUNCIL DISTRICT 2.

This appropriation request of $7,525,315.28 will allow the project to be closed out in PeopleSoft.

EVANS/ROSEDALE SECTION 108 LOAN: B06000
On July 21, 1998, the City Council, authorized an application to HUD for a Section 108 Loan Guarantee in the amount of $7.5 million for the Evans Avenue/Rosedale Street Business and Cultural District project (M&C C-16898).  In November 2001, HUD announced that it had approved the City's application in conjunction with a $1.5 million Economic Development Initiative (EDI) grant for use within the project boundary of Evans Avenue, Rosedale Street, IH-35W and Leuda Street in the Near Southeast Community. The Section 108 Loan Guarantee allowed low interest loan funds to be made available to a major developer as an incentive for developing mixed-used anchor activity.  Additionally, it allowed for Section 108 monies to be made available to new or existing businesses along Evans Avenue and Rosedale Street to rehabilitate properties. The EDI funds could be used for infrastructure improvements, Section 108 loan payments, property acquisition, or other uses or incentives to encourage redevelopment .

On November 18, 2003, the City Council authorized an expansion of the project to allow for the construction/rehabilitation of a public facility or facilities to house a public use library/research center and/or a public health center (M&C C-19859). In order to develop a catalyst project to spur development within the project footprint, the City Council authorized an amendment to the Section 108 Loan Guarantee application to redirect $6 million to construct the Shamblee Library, of which $4,934,984.33 was actually spent (City Secretary Contract No. 32336). The project is located in Council District 8, Mapsco 77K.

On February 17, 2005, the City Council adopted an appropriation ordinance for $7.5 million but did not fully appropriate debt service payments, interest payments and income (M& C G-14681).  This appropriation request of $10,498,451.46 will allow appropriation conversion/cleanup and allow for future debt service transactions to be processed. The last semi-annual payment will be due in August 2020.

The remaining available balance of $3,311.431.82 was reallocated to fund the United Community Centers Bethlehem Center as explained below.

UCC BETHLEHEM CENTER: B06800
On December 13, 2011, the City Council authorized the change in use and expenditure of $4,965,947.92, which consisted of $1,654,516.10 in HUD EDI grant funds and $3,311,431.82 of Section 108 Loan Guarantee funds for the construction of a new community facility at the corner of Evans Avenue and East Humbolt Street in the Evans-Rosedale Business and Cultural District. The Council also authorized a lease of the facility to United Community Centers, Inc. (UCC) (M&C C-25368). UCC, a nonprofit agency founded in 1909, provides social services including child care primarily to low and moderate income households.

On October 25, 2016, the City Council authorized the change in use and expenditure of $600,000.00 in EDI grant funds and Section 108 Loan funds to UCC, in the form of a grant for eligible costs associated with the finish-out of the community facility commonly known as the Bethlehem Community Center located at 951 Evans Avenue (M&C C-27973). The project is located in Council District 8, Mapsco 77K.

The City has fulfilled its HUD Section 108 obligation for this project and this appropriation request of $3,311,431.82 will allow the project to be closed out in PeopleSoft.

SHAMBLEE LIBRARY: X106CL
Prior to the conversion to PeopleSoft during FY 2015, the appropriations and actual expenditures for the construction of  the Shamblee Library were transferred from the Evans/Rosedale Section 108 Loan: B06000 into a Closed Project for R106 Fund. The City has fulfilled its HUD Section 108 obligation for this project and revenue appropriation request of $4,934,984.33 will allow the project to be closed out in PeopleSoft.

This M&C does not request approval of a contract with a business entity.

 
FISCAL INFORMATION/CERTIFICATION:

The Director of Finance certifies that upon approval of the above recommendation, adoption of the attached appropriation ordinance, funds are available in the current operating budget of the HUD Section 108 Loan Fund.

TO
    Fund Department
ID
Account Project
ID
Program Activity Budget
Year
Reference #
(Chartfield 2)
Amount

FROM
    Fund Department
ID
Account Project
ID
Program Activity Budget
Year
Reference #
(Chartfield 2)
Amount

Submitted for City Manager's Office by:
Fernando Costa (6122)
Originating Department Head:
Sonia Singleton (5774)
Additional Information Contact:
Rhonda Hinz (2573)

 
 
ATTACHMENTS
  119SECTION 108 LOAN FUND APPRORIATION CORRECTION CLEANUP_30107_AO19.VGclean.docx
  Section 108 Table.pdf