McGough, Adam

From:Sent:To:Cc:Subject:Attachments:

Gentlemen

O'Donnell, TheresaThursday, November 14, 2013 5:25 PMMcGough, Adam; Merten, SamuelMitchell, Bernadette; Gerard, RobynBexar-ResponseBexar-Response.docx

Here are the responses to the Mayors questions asked during our Monday morning meeting. Please let me know if youhave any additional questions.

theresa

MayorJs Questions on Bexar

Audit of Haitu's Ejigu's project.

The City's Grants Compliance Group is currently reviewing all expenditures and revenues. We anticipate

completion by early next week .

What was the financial split for the Ejigu project?

City portion was paid through federal funds. Mr. Ejigu provided equity of approximately $200K.

• CDBG• IIOME• Bond

• Grand Total :

$1,027,299$892,700$63,000$1,982,999

What was the developer fee or profit realized by Mr. Hailu Ejigu?

There was no profit built in to the development budget for Mr. Ejigu. The main source of profit has

come from rents being paid on the nine (9) residential units and commercial spaces. Rents are fixed at a

maximum of 30%of resident's household income . The City's office of People Helping People is also

tenant in one of the commercial spaces. The Housing Departm ent did structure a reduction of Mr.

Ejigu's loan asconsideration for the PHP rent obligation. This loan amendment was approved by City

Council in May 2012. Mr. Ejigu does pay property taxes on the development and is current on his loan

interest payments.

Cash Flow

During construction of the project, the City paid out money for work in place. More specifically - work

was performed by a contractor, next a city inspector checked the completed work and authorized

payments. Fundswere paid to Mr. Ejigu who in turn paid the contractors. The City did receive copies of

all checks and Affidavits of All Bills Paid from contractors.

Have these projects been audited?

Yes, HUD reviewed some of the commercial tenant files, but not the files for the residential component.

HUD did not identify any issues or concerns. Additionally, the Housing Department has requested that

the City 's Grants Compliance Office review all financial files associated with this development. That

review is currently underway and expected to wrap up early next week . Finally, the City Attorney's

Office has reviewed all project files and raised no objections.

Why Bexar Street?

BexarStreet was identified primarily because of the high community interest and probability of

leveraging efforts and investment of several partners and stakeholders in the immediate area. Bexar

Street was also a priority of the then sitting Councilmember, Mr. Leo Chaney.

Census Tract 39.02 was selected as a NIP target area in 2003. This target area was expanded in 2005 (to

include an abutting census tract) to capitalize on redevelopment initiatives for DHA/s Rhoads Terrace

and Turner Courts redevelopment efforts.

TR Hoover CDC, the neighborhood based CHDO, had also requested assistance in addressing blighted

conditions along Bexar Street to Irnprove marke tability of the ir newly constructed single-family homes.

TR Hoover was awarded approx. $714,000 in CDBG funds to begin redevelopment activities.

Unfortunately, TR Hoover lost its CHDO cert ification . At that time, the Housing Department stepped in

to direct the resources that had been allocated and began master planning. The Master Plan, created by

Good, Fulton and Farrell created a neighborhood and stakeholder consensus around a framework for

the area's redevelopment and re-invest ment .

Also during this period, over $ 9M in 2003 and 2005 Bond funds were allocated to repair and reconstruct

street conditions on Bexar under the Neighborhood Investment Program.

Why did Council support the scope creep?

With the economy in recession, lende rs and private resources were scarce and there was community

and political pressure to maintain project momentum and finish the development as envisioned by the

master plan.

Recent funds to Hailu Ejigu

In December of 2011, Council approved an action item for additional fund ing to cover the finish out of

the ground floor commercial spaces. In May 2012, the Council approved a rental agreement to locate

the People Helping People office into one of the commercial spaces in Mr. Ejigu's property. The lease

agreement was handled by the City's Real Estate Division. Mr. Ejigu's loan terms were amended to

reflect the consideration of rent obligation .

Too much money to people not qualified to spend it

The portion of the Bexar Street development that included Mr. Ejigu was $1.9M . This is the only project

the City has undertaken with Mr. Ejigu.

The largest expenditure on the Bexar Street development was $14.7M for streets and infrast ructure.

These are projects were bid by the Public Works Department. Additionally, the City handled all the land

acquisitions ($2.75M) and based on independent appraisals. Dallas Housing Authority built the Buckeye

Trails Apartm ents, also subject to the public bid processes. All vertical construction was also bid and

awarded to qualified contractors.

Did the Community change?

Yes, the community certainly changed! In fact, in June 2013, the City of Dallas received a North Central

Texas Council of Governments (NCTCOG), Center for Development Excellence "Celebrating Leadership in

Development Excellence" (CLlDE) Award for the "Bexar Street Redevelopment" , The CLiDE Awards

recognize projects and programs that are helping to ensure North Texas' sustainability into the future by

putt ing the region's Princip les of Development Excellence into action. A distinguished panel of jurors

comprised of nationally respected professionals in the fields of architecture, planning, and development,

met and selected the 2013 CLiDE Award recipients from the applications submitted.

Did number of jobs increase?

Federal funding for Bexar was qualified and considered eligible due to the public or area benefits the

project would bring to the neighborhood. To date, new job creation has been minimal other than the

construction jobs associated with the development.

HIS Bridgebuilders is working with the City of Dallas, Habitat and other stakeholders to start

neighborhood micro businesses within the Ideal/Rochester Park neighborhood. Banton Honey is one

successful example of these businesses. See attached link.

http://www.faithvillage.com!article!f98bf1507aQ54~.~~.gf2~6f613 a89bbac!a living example starting b

anton honey

Bond Proposition language

General obligation bond funding may be used for private commercial, industrial, retail, residential, and

mixed-use development in the Southern area of the city . Funding provided as a catalyst to promote

private economic development and may be used for planning, designing, extending, constructing and

acquiring land for public streets, utilities and other related infrastructure facilities or uses consistent

with this purpose. Funding is also availab le in support of mixed-use or residential development, for the

acquisition of improved and unimproved properties and for the cost of demolition of existing structures.

Private developments may be eligible for economic development grants and loans pursuant to Chapter

380 of the Texas Local Government Code. Grants and loans will be considered for infrastructure

improvements and/or land acquisition consistent with the scope of funding and other uses described

above. Grants or loans will be considered on a 'ease by case' basis subject to funding limitations and

development agreements approved by City Council. Residential developments will be required to have a

mixed-income set aside. Further, it is anticipated that resources and other forms of development

assistance from other applicable City economic development programs may be utilized to support this

program.