Using CDBG for Demolition Projects

November 8, 2012

Presenter

Betsy Giffin Section Supervisor, Training &

Technical Assistance Office of Community Development   77 South High Street                                Columbus, Ohio 43215    614.466.8216      F 614.752.4575                                                         Betsy.Giffin@development.ohio.gov

2012 Community Development Demolition Projects

• 21 Grantees

• $775,800 CDBG & Other Funds

• $13,900 Average Cost

Issues to be Aware of

• Federal Acquisition (URA)• Section 104(d) of the Community

Development Act (1:1 Replacement)

• Tenants & Relocation

• Federal or State Prevailing Wage

• Liens

• Change in Use or Property Disposition

Do You Plan to Acquire Property?

• If yes …

• Uniform Relocation Act (URA) applies

– 49 CFR Part 24 is the government-wide regulation that implements the URA.

For Demolition, if Governments Acquire Property They Usually Use One of Two Methods

Voluntary• Property is dilapidated

and blighting the neighborhood

• Property owner not willing or unable to make repairs

• You have a willing seller• Selling price is fair and

reasonable

For Demolition, if Governments Acquire Property They Usually Use One of Two Methods

Involuntary• Property is dilapidated and

blighting the neighborhood• Property owner not willing

or unable to make repairs• Specific property needed

for another purpose• Property owner is not

willing to sell

How to Resource – HUD Handbook 1378On-line

• http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/library/relocation/policyandguidance/handbook1378

Useful Chapters and Appendices

• Chapter 2– General Relocation/Tenant Assistance

Requirements

• Chapter 5– Real Property Acquisition

• Chapter 7 – Section 104(d) Relocation Requirements

Project Planning Hints

• Involuntary acquisition will take much longer time than voluntary acquisition and will cost more because of additional requirements like appraisals

Section 104(d) aka Barney-Frank Amendment

• Each Grantee has an Anti-Displacement Plan and Certification– Replacement of

Occupiable Housing– Extra Relocation

Assistance for LMI– 24 CFR 570.488(c)

A Housing Unit Demolished Must be Replaced if:

• Occupied, regardless of its condition and rents at or below FMR

• Currently vacant but occupied within the past 3 months regardless of its condition

• Vacant for more than 3 months and suitable for rehabilitation

Housing Does Not Need to Be Replaced if

• Property that has a value of less than $10,000,

• Has been vacant for at least 3 months,

• and has been documented to be dilapidated will be considered not suitable for rehabilitation.

Tenants and Relocation

• Tenants required to leave a property because of sale or intent to sell are eligible for relocation services and cost.

Federal Prevailing Wage

• What do you plan to do with the property after unit is demolished?

Does Federal Prevailing Wage Apply?

• Demolition with no construction on-site contemplated – NO (regardless of # units or cost)

• Demolition done under separate contract by grantee before transfer to developer – NO (regardless of # units or cost)

• Demolition contracted for by the same entity (developer, grantee contractor, etc.) doing subsequent construction and will be carried out while contracting entity controls site - YES

Does State Prevailing Wage Apply?

• If demolishing 5, 6, or 7 units - YES

Liens

• Liens are required to be placed on real property which is acquired and/or improved in whole or in part using CDBG funds in excess of $25,000.

• Demolition is considered an improvement.

Change in Use or Property Disposition for Property Acquired an/or Improved > $25,000

Recipient may not change the use or planned use of property (including the beneficiaries of such use) unless• affected citizens are

given reasonable notice of, and opportunity to comment on, any proposed change, and either:

Change in Use or Property Disposition for Property Acquired an/or Improved > $25,000

• The new use of such property qualifies as meeting one of the national objectives and is not a building for the general conduct of government;

• or the following requirements are met:

Change in Use or Property Disposition for Property Acquired an/or Improved > $25,000

• All parties agree to a new use which does not qualify as meeting a national objective

• The CDBG program is reimbursed the current fair market value of the property.

For Any Speaker!