#6 Request for CDBG Funds for Case Feed Buildi
NEIGHBORHOOD SERVICES MEMORANDUM
March 12, 2009
TO: Community Development Authority
FROM: Jennifer Petruzzello, Neighborhood Services Director
SUBJECT: Agenda Item 6: Consideration of a Request for CDBG Funding for the
Renovation of 922 Rockport Road
Summary:
The Janesville Community Development Authority has received a request from Gideon
Ngobi for $450,000 in CDBG funding to develop 5,660 SF of mixed use development on
the property located at: 922 Rockport Road (aka former Case Feed Building).
Request:
Mr. Ngobi and Case Feed Investment LLC is proposing to redevelop the property at 922
Rockport Road as a mixed use project, and is seeking financial assistance in the form of
a $450,000 CDBG grant. Mr. Ngobi is anticipating the restored property to be valued at
$500,000, which would increase the property taxes collected on this property. He is
proposing to put office space in the first floor of the store front, and a four bedroom, two
bathroom residence on the second floor. He intends to rent to a low to moderate income
family in the neighborhood.
In the former warehouse area of the building, he will provide rent deferred space for a
community learning center program with computer and tutor lab for neighborhood
children. He will also provide meeting space for neighborhood community groups such
as Hand-in-Hand Fourth Ward, Rock Teen Club and other interested neighborhood
groups. The goal of Hand-in-Hand is to facilitate an ongoing networking system of
neighbors. Mr. Ngobi would offer one year of free rent to these organizations.
Mr. Ngobi’s proposal, architectural and engineering report are attached.
Analysis
1. The rehabilitation of the second floor into a 4-bedroom apartment unit is
consistent with the CDBG goal of rehabilitating investor-owned housing to be
occupied by low and moderate income households. A rental rehabilitation
program is available for this purpose, which would offer a loan of up to $14,999.
This loan would be a 0% interest loan and deferred for 5 years. At the end of the
five years, the loan converts to a 5% loan, repaid over 10 years. The landlord
must rent to tenants with household incomes less than 60% of the County
Median Income. The property must be able to demonstrate by either equity or
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cash flow that it can support the loan payment. This application would be
reviewed by staff and does not require the specific approval of the CDA. The fair
market rent for a 4-bedroom unit cannot exceed $955/month.
2. This project would be consistent with the intent of the CDBG goal for residential
blight elimination funds. This property is located within a commercial area, rather
than a residential area, yet it is adjacent to the central city residential area, and
clearly has a blighting influence on the surrounding neighborhood. In the past,
projects considered under this category have consisted of residential properties
that were acquired by the City and demolished for future redevelopment.
3. The proposed use for the building appears to be consistent with CDBG national
objectives for rehabilitation. However, the maximum rent for the apartment unit
could not exceed the fair market rent (currently $955/month). The organizations
providing services to the community would need to be 501(c) 3 organizations,
who would be willing to provide demographic information regarding the
individuals served. These items would be required over a time period specified
by the CDA, and are necessary to document that the dollars used are benefiting
a low to moderate income population.
4. The redevelopment of the property located at: 922 Rockport Road is consistent
with the “Look West and Fourth Ward Neighborhood Revitalization Plan”,
adopted 12/8/08, specifically the Fourth Ward Redevelopment Site Concept,
which identifies the preservation and reuse of the historic feed building as a
priority.
5. In 2008, the entire CDBG allocation for the City of Janesville was $535,000. A
similar amount is anticipated for 2009. This funding is used to provide program
administration, neighborhood development staff, rehabilitation development staff,
support for the Neighborhood Action Teams, a summer camp scholarship
program, residential blight elimination, property maintenance, downtown
revitalization efforts, and support to ECHO, HealthNet, CASA, and the Janesville
Literacy Council. A revolving loan fund is used to support additional housing
activities.
6. The 2009 CDBG budget does not have sufficient funding for a project of this
magnitude. The budget does include $57,000 in neighborhood slum and blight
activities. Any amount in excess of this would require a substantial plan
amendment including a public hearing process.
7. The property is in poor physical condition. The building has fallen into a state of
disrepair both externally and internally. Staff has concerns over the structural
integrity of the building. Given the poor physical condition of the building, and the
fact that it has remained underutilized for sometime, the property is considered to
be a blighting influence. Gilbank General Contractors estimates the cost of the
needed work at $412,000. Additional estimates would be needed to ensure an
accurate assessment of the construction work is known (2 additional would be
required).
8. There is a discrepancy between the proposal and City Assessor records
regarding the amount of space available in the warehouse portion of the building.
The proposal indicates 1323 sf on the first floor, 1323 sf on the second floor and
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444 sf on the third floor. Assessor’s records indicate that there is 1,521 on the
first floor, 710 on the second floor, and 468 (unusable) on the third floor.
Recommendation:
Neighborhood Services Staff recommends that the CDA deny the request at this time.
While the proposed project would likely be a worthwhile addition to the neighborhood,
the requested funding represents 84% of the City’s annual CDA allocation, and funding
has already been allocated through a public process for 2009.
Staff further recommends that Mr. Ngobi be encouraged to seek other non-city funding
sources to support this project, and submit a new proposal during the summer as part of
the CDA’s normal allocation process for CDBG funds for a considerably reduced
funding request. This would also allow additional time for the agencies interested in
using the facility to obtain 501(c) 3 status and secure operating funds.
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