Asheville – The COVID shutdown kicked numerous small entrepreneurs and their employees out of work. As evidence that this is more than fake news, one need only note the new-normal volumes of panhandling at major intersections and makeshift tents in the woods. The good news is, the City of Asheville has a lot of “free money” from the federal government, and local leaders are hard at work coming up with strategies for deciding how and where to spend it. Their plans could be ready as early as next winter.
At Asheville City Council’s last meeting, Community Development Director Paul D’Angelo answered questions about an additional $4,699,862 in HOME funds the city was going to accept, by way of the consent agenda, as part of the American Rescue Plan. The city would use 15% of the funds for administration and planning, and $234,993.10 would be made immediately available for the city to start a planning process expected to last a year. D’Angelo said the city typically sets aside only 10% for funding, but this award was four times its normal allocation.
Another agenda item pertained to a $225,000 discrepancy discovered in the books of the Asheville Regional Housing Consortium, an agency that, through administration provided by the City of Asheville, receives federal housing funds for a four-county region. The error was made in bookkeeping for the HUD-approved Five Year Consolidated Plan, nicknamed the Con Plan. The staff report explains the funds were “inadvertently awarded twice” pursuant to “conflicting documentation” of the repayment of the $225,000 loan, which was made to Battery Park Apartments in 2018.
City staff contacted HUD’s field office in Greensboro for guidance, and it was decided that 10% of the error would be included in the 2018 budget to cover the administration of the grant, and the remainder would have to be forwarded to the current fiscal year.
Funds were available because three projects the consortium had planned on funding with HOME funds failed to be awarded the tax credits for which they had applied. Returning the balances to the fund, as well as $60,000 from a project that wasn’t described in detail, the city still had $460,362 for reallocation. The Asheville Buncombe Community Land Trust (ABCLT) was supposed to receive a HOME award from the city in FY20-21 for work dependent on a contract that is still pending. The ABCLT was, of course, amenable to receiving those funds this fiscal year, so the city will incur no penalties from HUD.
Following the mandatory public hearing, neither councilwoman nor member of the public had anything to say about this. Councilwoman Gwen Wisler, however, had questions after the following public hearing, which also pertained to changes to the city’s plan for using HUD funds.
D’Angelo explained staff typically comes before council in the fall to seek approval to modifications to the plan. This is because a lot of projects are relying upon federal tax credits. If they don’t receive the credits, the projects are a no-go, at least until the next round of funding, so they wouldn’t be in a position to utilize funding from the city, either. This year, a total of $133,816.53 was going to be returned, and, in the evident absence of any sense of urgency, leadership agreed to hold the funds in contingency for next year’s funding cycle.
Wisler asked why so many, a total of six initiatives of five agencies, had returned their funding. She suspected maybe the COVID shutdown and its fallout could have caused staffing shortages or price increases sufficient to shut down agencies or derail projects. She asked what lessons had been learned.
D’Angelo replied the city typically sees a few rescinded projects each year and added there hasn’t been a normal HUD cycle since he’s worked with the city, which is now four years. Typically, he has to deal with government shutdowns, and this year, the city didn’t get its HUD funding until the fourth fiscal quarter. That makes it difficult for some potential recipients to get all their paperwork together before deadlines.
This year, some agencies had leftover balances that were returned. Homeward Bound’s project, which was the purchase of the Days Inn on Tunnel Road for conversion to office space and permanent housing with wraparound services for the homeless, raised enough money from sources including the city, Buncombe County, and the Dogwood Health Trust, that it didn’t need its HOME award. D’Angelo explained accepting the federal funding would have triggered a lot of burdensome federal regulations.
Lastly, as the once best and brightest sleep shivering their tents, the city is also working on raising the value of housing eligible for HUD subsidy to expand the pool of qualified applicants for federal benefits to include higher-income homeowners. This is permissible and recommended because the housing market in Asheville is so distorted.
HUD’s HOME program will consider subsidizing new or previously-owned housing if it is valued at no more than 95% of a county’s median purchase price. Last fiscal year, HUD set the limits at $276,000 for Buncombe County, and somewhere between $208,000 and $266,000 for Transylvania, Henderson, and Madison counties. Data compiled by city staff, however, shows median purchase prices to be $400,000 for pre-owned and $365,000 for new home sales in Buncombe, with values ranging between $285,000 and $458,750 in the other counties. Council voted to authorize staff to forward the data to HUD for consideration of new limits.