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HomeMy WebLinkAboutLa Pine Food Bank Grant Infobus ore August 30, 2010 Honorable Dennis Luke Deschutes County Board of Commissioners 1300 NW Wall, Suite 200 Bend, Oregon 97701 Infrastructure Finance Authority RE: Community Development Block Grant Application, ($800,000) La Pine Food Bank, Second Quarter 2010 Competitive Application Review Dear Chairman Luke: Thank you for submitting the county's application for the La Pine Food Bank project. While the county's proposal was not recommended for funding by the review committee during the current funding round, we believe your project is important and has the potential to receive funds in the future. The department is committed to providing you additional project development technical assistance through the IFA Regional Coordinator for your area, Robert Ault, as you work to improve the application. Below please find our review comments along with recommendations and requirements: Land Acquisition - In January of 2010 when the county submitted the Intake Form for review, the Community Development Block Grant (CDBG) Program and Policy Coordinators made several comments via email regarding the project design. One of the comments was in regard to the size of the land area being considered for acquisition. Our correspondence indicated: "The property site is much larger than needed for the size of the building being proposed, so either the property being acquired needs to be downsized or there will need to be match money used for the portion of the property not needed for the building. Under the Uniform Relocation Assistance and Real Property Acquisition (URA) rules, CDBG funds can only purchase the minimum amount of land necessary for the funded activity. For example, an architect's estimate in an application for a similar facility received in the fourth quarter of 2009 identified a 10,000-12,000 square foot facility on 1.19 acres of land." The application submitted by Deschutes County proposes purchasing three tax lots in the Newberry Business Park which would amount to 1.29 acres of land. Each of the tax lots are .43 acres. The conceptual drawing submitted shows 70 parking spots with approximately half of those located on the third tax lot with no other improvements located on that tax lot. Seventy parking spaces seem more than what is needed for a facility of this size. What is the reason for proposing 70 parking spaces? It appears that for the 5,000 square foot facility, the county is proposing to purchase an excessive amount of property. There is no match money in the current proposed budget for purchase of the excess land, so the county or the non-profit will need to find match dollars in order tourchase the third tax lot. p f � <, lei. SEP - 2 2010 775 Summer St, NE, Suite 200 • Salem, OR 97301-1280 L _ 503-986-0123 • fax 503-581-5115 • TTY 800-735-2900 • www.orinfrastruct e.org BGAHD 0+j ADr`,,,�,,CO:FMiSSIuNERS ,MOON The county application must provide either documentation of the need for 70 parking spaces for the proposed facility or that non-CDBG matching funds are available and will be utilized to pay for the third lot, which solely contains parking spaces. This is not a CDBG eligible expense. The county must also provide documentation that non-CDBG matching funds are available to pay for all related land acquisition costs for the third lot, such as legal, appraisal, record fees, closing costs, etc. Operating Hours - The application for the food bank has two different proposals for operating hours. One part of the application states 21.5 hours per week and another part of the application states 21.5 hours per month. In the past the department has required that each facility built with CDBG funding be open a minimum of at least half time per week. The 21.5 hours per week proposal would be acceptable, the 21.5 hours per month would not be. In order to meet the continued use requirement the food bank must remain open for five years after the grant contract with the state is administratively closed. This could be 8-10 years from the date of grant award. If the volunteers the county relies upon to operate the facility are no longer available, the county must operate the facility with staff until the continued use requirement has been met or repay the grant. The county must provide a written commitment that the CDBG funded food bank will be open for a minimum of 20 hours per week and should volunteers be no longer available to operate the facilty the county will operate the food bank. System Development Charges - In the original application submitted for review, the architect included an estimate of $29,133 for System Development Charges (SDC's). System Development Charges cannot be paid with CDBG funds and the applicant was told they needed to include match funds for these items. Instead, the non-profit submitted a letter stating they believed the SDC's would be $7,360 and they would be asking the La Pine Sewer and Water Districts to waive these fees. Please confirm the actual system development charges that will be assessed or confirm the SDC's will be fully waived. If the fees are not waived the non-profit is committing to pay them, and must confirm in their budget and cash balances the availability of funds to pay the SDC's, if any. The county must provide documentation showing the amount of system development charges associated with the project and documentation that non-CDBG committed matching funds are available to pay for these costs, if any. Construction Budget - The CDBG program requires construction cost estimates be prepared by an architect or engineer licensed to work within the State of Oregon. The total cost of the estimate for the 5,000 square foot building is $557,400 with $27,870 budgeted for contingency. The proposed project budget includes a 5% construction contingency amount of $27,870. It is not recommended to commence with a construction project with less than a 10% construction contingency. Based upon the construction estimate of $557,400 the full contingency amount would be $55,740. The Department strongly recommends budgeting for the full construction contingency. Project Timeline — The application contained a proposed project work plan. This timeline shows the county beginning activities on September 1, 2010 and having the architectural design completed on December 31, 2010. This is not a realistic timeline since OBDD-IFA will not make the 2nd quarter funding awards until August 30, 2010 and if the county was awarded a grant, the county and the department must enter into a grant contract (may take 1-2 months) then complete the environmental exemption, and then develop an RFQ for the architect as well as begin the Uniform Relocation Act process for the land acquisition. Once an architect is chosen and a contract developed, it must be submitted to OBDD for review and approval before it is executed. The projected timeline does not incorporate time to complete the environmental assessment required for the construction project, selection of an architect, or time for OBDD-IFA to approve all project related documents. The timeline should be adjusted by a minimum of 4-6 months to more accurately reflect the time needed to complete the project. The department recommends revising the project timeline and incorporating the CDBG program requirements into the timeline. Grant Administration - The project budget contains only $15,392 for grant administration. The Department strongly recommends that the county budget the maximum funds allowed under the program of $25,000 for this activity. Fixtures and Equipment — There is a budget line item for $25,500 for fixtures and equipment. The architect's budget has a line item for "furniture, fixtures and equipment" for $25,500. Page 12-3 of the 2010 Method of Distribution requires that any purchase and installation of equipment be limited to that which is a fixed and integral structure to the building. Any furniture or items that are not fixed and integral cannot be paid for with CDBG funds and must be paid for with matching funds. The county must provide a list identifying each piece of equipment proposed to be purchased with CDBG funds along with the purchase price and installation cost associated with each piece. Proposed Food Bank Budget — The proposed budget that was included with the application is titled "Proposed Pantry Budget" but includes expenses for the kitchen food program which is not a part of the food bank and the clothes closet which is also not a part of the food bank. The La Pine non-profit that will be operating and maintaining the new food bank facility has not had a financial audit completed within the past three years. Although the non-profit has been in operation for eight years they still have minimal working capital and are vulnerable to any downturns or unanticipated expenses. While their expenses are fairly consistent from month to month their contribution revenue can be sporadic. The financial projections that were provided with the application appear to be optimistic and inconsistent with historic gifts received. What is the increased giving attributable to? The non-profit revenues do not appear to be sufficient to operate the size of the facility that is being applied for and would be a drain on their overall operational revenues and result in further annual losses. Due to their current working capital position any future losses would likely cause the entire operation to fail before the required five year continued use period has expired. The county must review the operating budget and provide the department with an operating and maintenance budget that covers only the operation of the food bank and its dedicated charitable donatons . Documentation is needed of the financial tax return records or year end closing statements for the past three years for the non-profit operations. These documents need to show revenue resources and expenditures for overall operations of the three facilities as well as separate statements on the individual facilities. The county must submit a written commitment that if the non-profit is unable to properly operate and maintain the facility through the completion of the five year continued use period the county will do so or repay the grant. Operating Agreement — Appendix A of the La Pine Community Kitchen Operating Agreement to be entered into between the county and the La Pine Community Kitchen identifies the estimated monthly operational cost of $531 per month, including utilities, insurance and janitorial service. This cost does not include any building maintenance/repair expenses. All facilities constructed with federal funds must be maintained appropriately. Maintenance funds need to be included in the budget. There is also a disparity between the operation and maintenance expense line item contained in the proposed operating budget and the amount contained in Appendix A. These two documents should contain consistent information. The county must provide a revised Appendix A of the La Pine Community Kitchen operating budget that provides for building maintenance and repair expenses and that correlates to the new proposed operating budget that is submitted. A breakout of the items and amounts in the operating expenses is also requested. This project, as proposed, will require matching funds for land acquisition, system development charges (if any), suggested additional construction contingency as well as furniture and equipment that is not fixed and integral. Currently, there are no matching funds committed to the project and the operating budget proposed by the non-profit is insufficient and lacks data to support its projections. Overall the project appears to be lacking in development and will need additional fund raising as well as project development work. The application is conceptual in nature and needs further refinement in order to be ranked as a ready -to -proceed construction project. There is no indication that the non-profit has discussed this food bank concept with the Oregon Food Bank and requested their expert assistance with design, operating expenses, and fund raising. The department recommends that the county and the non-profit contact the Oregon Food Bank and request their expertise with designing the appropriately sized food bank and developing a realistic operating budget. If you have any questions or want to a schedule a meeting to discuss the project proposal in more detail please contact Robert Ault, your Regional Coordinator, at (503) 986-0133 or by email at Robert.AultO)state.or. us Sincerely, choes ler ctor c: Robert Ault, IFA Regional Coordinator