After some funding confusion, City Council members recommended swapping federal grant money sources Monday so Red River Valley Habitat for Humanity can pay for its most recently built affordable house.
The Grand Forks City Council Finance/Development Committee recommended the city use $40,000 in unassigned Community Development Block Grant funds to cover a loan for construction costs at 617 N. 24th Street in Grand Forks.
Originally, Habitat had planned to use another type of federal funding on the house, and so it took out a construction loan for $40,000, said Meredith Richards, city planning and community development deputy director.
Although City Council allocated that money - referred to as HOME funds - to Habitat in 2013, its application for the funds had not yet been submitted. In the end, the money was not readily available to pay back the loan, Richards said.
Based on federal standards for the HOME funds, Habitat’s project does not qualify for the money, Richards said.
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City staff recommended using Community Development Block Grant funds to cover the loan. Committee members agreed, saying they wanted to help Habitat continue building affordable homes.
“It’s an unusual approach, but it does serve the purpose,” Richards said.
The full City Council will make the final decision on the switch on Aug. 4.
No funds
Habitat didn’t qualify for the HOME funds because the house was valued at more than Habitat’s cost to build it, and the monthly house payment is less than 30 percent of the homebuyer’s gross income, Richards said.
Habitat’s construction cost was low because it built on land donated by the city and had other private donations, she said.
HOME funds have been used on Grand Forks Habitat projects in the past, Richards said, but the housing market is much different now, contributing to the house’s high valuation.
Council member Doug Christensen raised concerns about Habitat’s finances, saying he doesn’t want that organization or any other to be permanently dependent on grants.
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But Richards said, “Clearly they have learned a lesson in this process.”
