McGough, Adam

From:
Sent:
To:
Cc:
Subject:
Attachments:
Gentlemen
O'Donnell, Theresa
Thursday, November 14, 2013 5:25 PM
McGough, Adam; Merten, Samuel
Mitchell, Bernadette; Gerard, Robyn
Bexar-Response
Bexar-Response.docx
Here are the responses to the Mayors questions asked during our Monday morning meeting. Please let me know if you
have 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 Ejiguproject?
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 Department 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, HUDreviewed some of the commercial tenant files, but not the files for the residential component.
HUDdid 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?
Bexar Street 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. LeoChaney.
Census Tract 39.02 was selected as a NIPtarget 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.
TRHoover CDC, the neighborhood based CHDO, had also requested assistance in addressing blighted
conditions along Bexar Street to Irnprove marketability of the ir newly constructed single-family homes.
TRHoover was awarded approx. $714,000 in CDBG funds to begin redevelopment activities.
Unfortunately, TRHoover 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-i nvest 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 inf rast ruct ure.
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
Trail s 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 Principles 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.
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 available 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
assistancefrom other applicable City economic development programs may be utilized to support this
program.