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City of Kalispell/CAPNM NSP3 Program Income PlanNeighborhood Stabilization Program 3 Program Income Plan Grantor "Commerce" Montana Department of Commerce Community Development Division Grantee "the City" City of Kalispell, Montana 201 151 Avenue East, Kalispell, MT 59901 Sub -Recipient "CAPNM" Northwest Montana Human Resources dba Community Action Partnership of Northwest Montana Grantor Contact Jennifer Olson Division Administrator Community Development Division 406-841-2773 jeolson@mt.gov Grantee Contact Doug Russell City Manager 406.758-7703 drussell@kalispell.com Sub -Recipient Contact Tracy Diaz Executive Director 406.752.6565 tdiaz@capnm.net Need for Plan Governing Neighborhood Stabilization Program (NSP) Program Income The purpose of this plan is to establish guidelines on the policies and procedures for the administration and utilization of program income received as a result of activities funded under the NSP. NSP 3 is authorized under Section 1497 of the Dodd -Frank Wall Street Reform and Consumer Protection Act: Additional Assistance for the Neighborhood Stabilization Program. This NSP Program Income Plan is intended to satisfy the requirements specified in federal statute and regulation at Section 104(j) of the Housing and Community Development Act ("the Act"), as amended in 1992 and 24 Code of Federal Regulations (CFR) 570.489 (e) (3) and Section 1497 of the Dodd -Frank Wall Street Reform and Consumer Protection Act: Additional Assistance for the Neighborhood Stabilization Program. These statutory and regulatory sections permit the Grantee and Sub -Recipient to retain for reuse, NSP program income generated by eligible NSP activities. The eligible NSP activities shall principally benefit low-, moderate-, and middle -income (LMMI) individuals and families, and limited to only those activities as described in the Grantee's Application and Commerce Contract # MT-NSP-12-007-01-001 and subsequent contract amendments. Acceptance of the NSP Program Income Plan The NSP Program Income Plan details the proposed uses of NSP Program Income and confirms the jurisdiction's required compliance with state and federal regulations. NSP Program Income Plan, updated December 18, 2015 Page 1 of 7 Program Income Defined Program income is defined within federal regulations at 24 CFR 570.500(a), which specify that NSP program income is gross income received by the Grantee that has been directly generated from the use of NSP funds. There are limitations and requirements based on the NSP activity that generated the program income and on the date the income is received. When program income is generated by an activity that is only partially assisted with NSP funds, the income shall be prorated to reflect the percentage of NSP funds used. 1. Examples of program income include, but are not limited to, the following: • Proceeds from the disposition by sale or long-term lease of real property purchased or improved with NSP funds; • Proceeds from the disposition of equipment purchased with NSP funds; • Gross income from the use or rental of real or personal property acquired by the grantee with NSP funds, less costs incidental to generation of the income; • Gross income from the use or rental of real property, owned by the grantee that was constructed or improved with NSP funds, less costs incidental to generation of the income; • Payments of principal and interest on loans made using NSP funds; • Proceeds from the sale of loans made with NSP funds; • Proceeds from sale of obligations secured by loans made with NSP funds; • Interest earned on funds held in a revolving fund account; • Interest earned on program income pending its disposition; and • Funds collected through special assessments made against properties owned and occupied by households not of low and moderate income, where the assessments are used to recover all or part of the NSP portion of public improvement. 2. Program income does not include, but is not limited to, the following: • Interest earned on grant advances from the U.S. Treasury. Any interest earned on grant advances is required to be returned to the U.S. Treasury; • Proceeds from fund-raising activities carried out by subrecipients that are receiving NSP assistance to implement eligible activities; • Funds collected through special assessments that have been made to recover the non-NSP portion of a public improvement; • Proceeds from the disposition by the grantee of real property that has been acquired or improved with NSP funds when the disposition occurs after grant close-out for entitlement grantees; • Proceeds from the disposition of real property that has been acquired or improved with NSP funds, where the disposition occurs within a five-year period after expiration of the agreement between the grantee and subrecipient. Program Income Plan NSP Program Income Plan, updated December 18, 2015 Page 2 of 7 The City will comply with the following to use program income funds according to NSP regulations and guidelines. 1. Restrictions Program Income funds are limited by the following restrictions: • 100% of all program income funds receipted must be used toward an eligible use as established below. • NSP funds must be expended on project activities that meet a National Objective. • At least 25% of all program income funds receipted must be used to benefit low income households (less than 50% Area Median Income) and must be tracked to report compliance to Commerce). • No more than 10% of all program income funds receipted may be used for expenses related to program administration. • All NSP program income funds must follow the NSP Federal Register Notice, State of Montana Substantial Amendment, NSP Grant Administration Manual, the applicable Department of Housing and Urban Development (HUD) regulations, and all other applicable federal regulations. 2. Eligible Uses The City has identified the following Eligible Uses(s) for which program income may be used. Only the following may be used as eligible expenditures: • Eligible Use A: Financing Mechanisms Eligible Use A may only be used for financing mechanisms to acquire an eligible property and funds cannot be used for foreclosure prevention. • Eligible Use B: Acquisition Rehabilitation • Program Administration and Planning (in combination with an eligible use) 3. Cash Management All NSP program income generated by NSP-funded activities will be retained in a separate interest bearing NSP program income account held at the local level. All NSP program income must be disbursed for eligible NSP activities. The Grantee will be allowed to use the NSP program income to meet the used/obligated milestones. Furthermore, any NSP program income funds that are not shown to be used/obligated on the Grantee's next NSP Program Income Report may be returned to Commerce. Program Income should be expended in 12 months of receipt or returned to Commerce, unless otherwise agreed upon between Commerce and the City. This information will specifically be included in program income reports submitted to Commerce. If program income generated from all sources does not exceed $25,000 in a program year for entitlement or state the grantee shall utilize the funds for administration or include the funds in another CDBG activity if reviewed and approved by Commerce. (see section 6. Reuses of NSP Program Income) NSP Program Income Plan, updated December 18, 2015 Page 3 of 7 • If program income generated exceeds $250,000 per year, the 25% set -aside requirements must be met. The Grantee will incorporate within subrecipient agreements such provisions as are necessary to ensure compliance with the requirements of this paragraph, including the requirement that program income be remitted to Commerce. The City has entered into a Sub -Recipient Interlocal Agreement with Community Action Partnership of Northwest Montana (CAPNM) to administer the NSP 3 Program Income. 4. General Administration (GA) Cost Limitation The Grantee will be allowed general administrative costs of up to ten percent (10%) of all NSP Program Income expended during each fiscal year. This information will be included in program income reports submitted to Commerce. S. Financial Management The financial process for handling of funds following receipt of program income involves CAPNM Fiscal Department staff. Staff registers receipt of NSP program income. Fiscal staff deposits the program income checks in the designated fund. It is tracked through CAPNM's MIP Software. The acquisition of foreclosed, vacant or abandoned properties follows a process identified in the City's Sub -Recipient Interlocal Agreement approved by the City Manager and the CAPNM Executive Director. It authorizes CAPNM as the Sub -Recipient to approve and execute the purchase transactions of foreclosed, vacant or abandoned properties. CAPNM is also authorized to execute contracts for rehabilitation and to execute sales documents to income -eligible households. CAPNM has a subject property appraised and inspected for suitability and will recommend acquisition. Maximum purchase price is set at one percent less than the appraised value of the property. A closing is scheduled and the property is insured, slated for snow and landscape management, and utilities are transferred. Following acquisition, CAPNM creates a final scope of work from the completed inspections. Bids are generated via contractor(s) and procured through the NSP/CDBG procurement process. The Construction Agreement is created, reviewed and approved by CAPNM staff and signed by the contractor(s). CAPNM is also responsible for contract management. All related materials are provided to the City upon request. The Purchase Requisition, with accompanying executed Construction Agreement, is entered into CAPNM's MIP accounting system and then routed for approval through the following channels: NSP Coordinator, Housing Director, and Executive Director, according to CAPNM's Fiscal Policies and Procedures. Inspections and building permit activities must be conducted prior to payment being issued for work completed. Contracts are monitored by CAPNM and activities are reported to the City for compliance during regular reporting. When rehabilitation is complete, an appraisal is ordered to assist CAPNM staff in determining purchase price. CAPNM notifies current income -eligible applicants of property availability on a first - come, first -served basis. CAPNM performs applicant eligibility review and approval. Closings are scheduled and conducted with the title company and the property is transferred to the new owner. Program income is received from the sale and checks are deposited as noted above. CAPNM provides the City copies of all required documents following the property closing. NSP Program Income Plan, updated December 18, 2015 Page 4 of 7 Recaptured funds would also be deposited and utilized to further the NSP program as noted above. The Grantee and Sub -Recipient are audited annually via independent auditing firms for federal and financial compliance. 6. Reuses of NSP Program Income The Sub -Recipient will be allowed to use earned NSP program income for eligible NSP activities in the areas of greatest needs listed in the Grantee's Application and in Exhibit B of the NSP Standard Agreement. Program income will remain with the CAPNM and will be used according to NSP eligible uses specified in section 3. Cash Management of this plan, Appendix D, A. Management Plan, of the Sub - Recipient Interlocal Agreement, or unless otherwise amended by the City for use or CAPNM fails to comply with the requirements to reuse the funding. CAPNM will use funds for NSP activities, or funds will be returned to the City (if under $25,000) to be used for other CDBG projects or as approved by Commerce. All program income generated by activities funded by NSP grants will be placed in a separate interest bearing NSP program income account. There will be no commingling of NSP program income funds with other program income funds. 7. Reportin; The Grantee and sub -recipient shall comply with all NSP reporting requirements including NSP Program Income Annual Report to Commerce as required and identified in the Frist Amended and Restated Sub -Recipient Interlocal agreement. 8. Federal Overlay Compliance CAPNM shall ensure that the use of NSP program income under this plan complies with all federal overlay requirements including, but not limited to: - Citizen participation - Labor standards - Environmental review - Acquisition and relocation - Equal opportunity - Procurement - Section 3 employment - Maintenance of adequate accounting and - Lead -based paint recordkeeping systems Plan Revisions Commerce will consider each request to determine whether the amendment is substantial and will analyze the impact of the proposed modification. Commerce will consider amendments to the scope of activities and budget that have similarity to the original major components of the project. The CAPNM has the authority to propose amendments and revisions to this document with City and Commerce approval. The Grantee agrees to update this document if additional guidance from Commerce is received regarding the contents of the plan. Documents Incorporated by Reference All application materials, contracts, contract amendments, management plans, prior reporting and certifications and resolutions submitted to Commerce remain in full force and effect for the duration of this period of affordability. NSP Program Income Plan, updated December 18, 2015 Page 5 of 7 These certifications are made under penalty of perjury under the laws of the State of Montana. SIGNATURE OF CERTIFYING OFFICIAL: Doug R ss II, City Manager City of Kalispell, Montana SIGNATURE OF SUB -RECIPIENT CERTIFYING OFFICIAL: RJ 1.0.LQ, C,_[:�YJ'fAb., Tracy Diaz, E ecutive Dire gr Northwest Montana Human Resources dba Community Action Partnership of Northwest Montana rrrrrrrrrrrrrrrrrrrrrrrrr�rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr■ ACCEPTED Montana Department of Commerce: Signature Printed Name / Title Date NSP Program Income Plan, updated December 18, 2015 Page 6 of 7 These certifications are made under penalty of perjury under the laws of the State of Montana, SIGNATURE OF CERTIFYING OFFICIAL; Doug R ss II, City Manager City of Kalispell, Montana SIGNATURE OF SUB RECIPIENT CERTIFYING OFFICIAL: ILL Tracy Diaz, decutive Diredf6r Northwest Montana Human Resources dba Community Action Partnership of Northwest Montana wrrrrrr�wrrrarwwrwrwrrrrrwrrsrsrrrrrr*rrrrrrrarararrrrrrsrrrarr■rwrwrrrwrrwrr.. ACCEPTED Montana Department of Commerce: n-i Signv e{—Date T —� M`► �{;..,_ (�(�rr. ,' t--- r �i�� l5'iJ�a�Tt%" C_� ' �t; z4.� . Printed Name / Title �� PROGRAM INCOME - TITLE I CERTIFICATION Amendments to Title I of the Housing and Community Development Act require that local governments continue to spend all program income for eligible Neighborhood Stabilization Program (NSP) grant activities according to all Title I requirements, even after close out of the NSP project. The following certification is to be executed by the chief local government official to certify for every program income report to Commerce that these requirements have been met. Certification I hereby certify that all program income expenditures generated by NSP activities for the City of Kalispell were expended for eligible NSP activities, according to requirements of Title I of the Housing and Community Development Act of 1974, as required by amendments to the Act dated October, 1992. Doug Russell, City Ma ger Chief Local Government Official Date Tracy Diaz, EOecutive Director') Northwest Montana Human Resources dba Community Action Partnership of Northwest Montana e ' I Date