Syndicated by: Montana News
The City of Minot is taking corrective action to address a local developer’s failure to perform under a Community Development Block Grant – Disaster Recover (CDBG-DR) Development Agreement.
In 2013, the City entered into an agreement with 16th Crossing, LLC, to expend $5 million in CDBG-DR funds to provide public infrastructure improvements to a development located in southeast Minot. Although not required to do so by the Development Agreement, the City also spent an additional $951,193.99 of its own money on public infrastructure for this development. In exchange, 16th Crossing, LLC, was to construct 178 townhomes and provide 350 manufactured homes on properties located in the 55th Crossing West neighborhood. A minimum of 51% of the townhomes and mobile homes were to be set aside and offered at a price affordable for Low to Moderate Income (LMI) buyers. The Development Agreement called for completion of the townhouses and mobile homes within two years.
Of the 178 townhouses, the developer contends that 34 townhouses are completed and occupied, with 15 occupied by LMI households, and 19 occupied by non-LMI households (44% LMI); the developer contends an additional 15 townhouses are either built or being built and are unoccupied.
City staff has had several meetings with the developer over the past two years to attempt to move the project forward. To date, the developer has not made significant progress towards completing the project, nor has the developer offered a viable proposal to bring the project into compliance with the agreement. The developer has also failed to provide sufficient documentation or information establishing that it has the ability to meet the obligations of the development agreement. The City Council approved a motion on Monday, Dec. 4, 2017, to terminate the agreement with the developer effective Friday, Dec. 8, 2017, and seek to recover the federal and City dollars expended on the project from the developer.
“To ignore the developer’s default in this situation would expose the City to potential adverse findings should this project be audited by HUD,” said Minot Mayor Chuck Barney. “Beyond that, the City’s failure to recover the HUD funds used on the project could result in the City having to pay those funds back to HUD using City dollars. That is something we simply cannot afford.”
As a recipient of CDBG-DR funds, the City is required and expected by the U.S. Department of Housing and Urban Development (HUD) to proactively assure that all investments of these federal dollars comply with the agreements made for their expenditure. Failure to do so could compromise the City’s current and future HUD funding.