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The following is a statement from Evanston City Manager Wally Bobkiewicz regarding concerns of Evanston Minority Business Consortium:
“The City of Evanston has been aware of the concerns of the Evanston Minority Business Consortium (EMBC) regarding the $18.5 million Neighborhood Stabilization Program 2 (NSP2) grant since shortly after it was awarded in February 2010. Elected officials and staff have met with members of EMBC and corresponded with them. Their concerns are focused on the role of the City’s partner, Brinshore Development, in NSP2 and the expectations of the share of construction contracts that will be awarded to minority-, woman-owned and Evanston-based business enterprises. The selection of a development partner and program goals and implementation were carefully considered by the City to ensure that NSP2 and City goals would be achieved.
Partnership with Brinshore Development
- Threshold Requirements for NSP2 Eligibility. In order to be considered for the NSP2 grant, the City had to demonstrate sufficient experience in each of the six eligible NSP2 activities. Without Brinshore as a partner, the City would not have been able to meet the threshold capacity requirement to be considered for the grant. The City is unaware of any Evanston-based development partner(s) with the capacity to meet these basic thresholds.
- Application Review Criteria. Assuming the threshold requirements were met, HUD then reviewed applications on a variety of criteria, including need, soundness of approach, ability to leverage additional funds. Based on six factors, applicants were able to achieve a maximum score of 150 points. Brinshore’s capacity and experience accounted for approximately half of those points.
- Efficiency and Consistency. NSP2 sets an ambitious timeline for the expenditure of grant funds and project completion. 50 percent of grant funds must be spent within two years of receiving the grant and all funds must be expended within three years. Having one entity responsible for program activities reduces the administrative costs associated with the grant, which allows more resources to be devoted to the stabilization of the two target areas through the acquisition of foreclosed and abandoned homes and the development of affordable housing. In addition, having one developer responsible for the property rehabilitation and property management in the case of rentals ensures a consistent level of quality throughout the program.
- Ability to leverage additional resources. Leveraging of other funds as evidenced by firm commitments of specific amounts from non-federal resources is essential to the completion of the approved NSP2 project. Most of the leveraged resources are necessary to complete Emerson Square. Brinshore brought commitments of $23,150,000 in private investor equity, developer equity, construction loans and permanent loans out of $82 million in total development costs for the project as proposed in our application. With the reduced grant award, Brinshore’s commitment level has increased to approximately $31 million out of $49 million in total development costs for the project described in the grant agreement with HUD. The City’s NSP2 award is anticipated to fund only five percent of that project compared to the 50 percent requested in the initial application to HUD; however the expectation remains that the City will complete the project. Without these additional resources leveraged by Brinshore, this phase of NSP2 would not be realized.
Minority-, Woman-Owned and Evanston-based Business Enterprises
- Minority-, Woman-Owned and Evanston-based business enterprise (M/W/EBE) and Section 3 (low-income) contracting and hiring goals. While the primary goal of the NSP2 is to stabilize those neighborhoods hardest hit by the foreclosure crisis, the City has always understood the significant economic opportunity it represents for Evanston residents and businesses. Based on City policy and code, the City and Brinshore are committed to awarding a minimum of 25 percent of total contracts to M/W/EBEs. In addition, and in compliance with federal Section 3 regulations to maximize benefit to low-income residents, it is the City’s goal to award 10 percent of covered contracts to Section 3 businesses and have 30 percent of new hires be Section 3 residents. To be categorized as a Section 3 resident, one must have a family household income of less than 80 percent of area median income, as defined by HUD.
To date, no construction contracts have been awarded. Brinshore released the first bid package for NSP2 on October 1, 2010 and proposals are due October 22, 2010. Thus far, most of the grant activity has focused on property acquisition and predevelopment tasks. As of early September, approximately 40 percent of funds expended for predevelopment work have gone to Evanston-based businesses, including appraisal, legal and architectural services. Excluding expenditures for title companies, of which there are none based in Evanston, 56 percent of subcontracted expenditures have gone to Evanston-based businesses.
- M/W/EBE and Section 3 Certification. On July 2, 2010, the City announced the certification process for M/W/EBEs and Section 3 business concerns and individuals. To date, the City has certified approximately 25 businesses as M/W/EBEs and/or Section 3 and approximately 60 individuals as Section 3 residents. Staff continues to encourage businesses and individuals to apply and to contact those with incomplete applications for missing information so that they can be certified.
Given the competitiveness and constraints of NSP2, the City strongly believes that its partnership with Brinshore enables it to achieve the neighborhood stabilization and economic goals of the program. The City shares with the EMBC the goal of maximizing the involvement of M/W/EBE firms and providing jobs and income for as many unemployed or underemployed Evanston residents as possible. We hope to work together with EMBC to achieve these goals, as well as the NSP2 goals of neighborhood revitalization, stabilization of the housing market and the creation of affordable housing.”