Statesboro City Council last week selected Insight Planning & Development, based in Wilmington, North Carolina, to administer a $5 million rehabilitation program for housing rehabilitation funded from Statesboro’s share of federal American Rescue Plan Act, or ARPA, money.
Insight, recommended by a city staff committee from three organizations that responded to a request for qualifications, will bill hourly rates for its services within a maximum price of $550,000. So, the city could spend up to 11% of the $5 million on administrative costs for its program, lasting as long as five years.
The city government has received $6.15 million and expects to get another $6.15 million, for a total of $12.3 million, under the massive federal “Rescue Plan” enacted in March. In a nonbinding Nov. 16 decision, the mayor and council earmarked $5 million for improvement or replacement of substandard housing, while directing the rest of the ARPA funds to other purposes.
Out of the first $2.5 million, the city is directing $1.5 million to a target area around Johnson Street on Statesboro’s westside, as mapped in the Urban Redevelopment Plan adopted earlier this year. Another $1 million will go to “scattered sites” in other areas of town.
“By doing scattered sites, that means we could be working in other neighborhoods if people have a need for housing,” City Manager Charles Penny said Monday. “Now, how we determine all of that, some of those policies have yet to be set, and again, they would have to meet income guidelines.”
Beyond that first $2.5 million, the plan is to choose a second target area to benefit from another $1.5 million, with another $1 million to be allocated for other scattered sites.
The city staff has proposed providing this funding for upgrades to privately owned housing through five-year “deferred” loans to the homeowners who apply and qualify. After the money is spent on renovations completed under the city’s control with direction and monitoring by the administrative firm, the loans would be forgiven at the rate of 20% a year.
So, if the owners keep the homes for five years after the work is done, they would owe nothing.
“Normally there’s a deed of trust that’s taken on the property, and the repairs are made and the deed of trust is recorded,” Penny explained. “After the five-year period, then that deed of trust is cancelled.”
But if someone sells their home with ARPA-funded, city-provided improvements just past the one-year mark, they would have to repay 80% of the renovation cost; after the two-year mark, 60% of the cost; after the thee-year mark, 40%; or after four years but not yet five years, 20%.
Most people won’t sell and move away, but the requirement also applies when someone dies and their heirs decide to sell the home, Penny said. A portion of the sale proceeds would go to the city to repay the renovation cost.
“Then we take that money and we’re able to rehab other homes,” he said.
To be decided
Details of the program, including the limit of the size of each loan, remain to be decided with the mayor and council’s approval. One of the first things Insight Planning & Development has been directed to do is create a “Housing Rehabilitation Policies and Procedures Handbook.”
Not only is the handbook not ready yet, as of Monday the city had not actually signed the contract with Insight.
“The first step to develop this program is for them to create this handbook, and then we will bring that to the council because the council is interested in looking at it and it’s going to have all of the policies and procedures,” said city Planning and Development Director Kathy Field. “For instance, it might say that we’re going to work with people who own their homes first, and then maybe secondly work with investor-owned homes.”
Under the terms of its offer, Insight Planning & Development will obtain contractor bids on behalf of property owners and coordinate inspections of the homes and the work done. But first, the firm is expected to create the handbook, an implementation plan, a financial reporting system, a digital geographic database and a public information and outreach program.
“There are a lot of starter things that need to happen before we can actually start implementing this program,” Field said.
March 31 goal
She and Penny said the overall goal now is to have the program operational in the first quarter of 2022, meaning by March 31. Under the federal law, the ARPA funding must be spent by the end of 2026, so the program could last up to five years with its current funding source.
City Council approved, by a 5-0 vote Dec. 7, awarding the contract to Insight with the “not to exceed” amount set at $550,000. The other organizations that submitted qualifications and descriptions of services were DSW out of Galveston, Texas, and a local nonprofit, Habitat for Humanity of Bulloch County.
Insight did not necessarily offer the lowest hourly rates, but this was a request for qualifications from service providers, not a bid, Penny explained. A team of city staff members scored the offers and selected Insight. Its experience with this type of redevelopment was a deciding factor, Field said. Her memo to the mayor and council stated that the firm has completed more than 200 Community Development Block Grant, or CDBG, projects involving more than 2,000 homes.
In earlier discussions, one District 1 City Councilman Phil Boyum expressed opposition to the funding benefitting landlords who own substandard rental housing.
Field and Penny said they intend to make owner-occupied homes the first priority. Both said the extent to which rentals are included remains up to the elected officials.
However, Penny indicated that the city staff hopes to follow the guidelines for Community Development Block Grants, under which rental properties are eligible. This is not currently a CDBG-funded project, but he said wants the city’s plan to be eligible for future grants.
“Again, that will be a policy decision (for the mayor and council),” Field said. “Obviously, I think, everyone wants to start off with the owner-occupied homes, but reality is that 58% of the housing units in the Urban Redevelopment Area are investor-owned, so if you really want to impact a neighborhood, you have to look at investor-owned as well.”