Submitted By
Ahmad Zayyad, Deputy Village Manager/Interim Neighborhood Services Director
Agenda Item Title
Title
A Presentation Concerning the Corrective Action Response of the Oak Park Regional Housing Center
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Overview
Overview
The Oak Park Regional Housing Center submitted a Corrective Action Response Plan in response to a letter sent by Village Manager Jackson addressing the 2023 financial monitoring and KPW performance review.
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Anticipated Actions/Commitments
Recommendation
Staff has prepared a presentation for the Village Board regarding the Oak Park Regional Housing Center corrective action plan. The Village Board will also have the opportunity to hear a presentation from the Oak Park Regional Housing Center and take public comment. Staff seeks direction from the Village Board on a potential funding grant agreement for consideration by the Village Board at a later date.
Report
Village staff learned that the Oak Park Regional Housing Center (“Housing Center”) has an inactive status with the United States Department of Housing and Urban Development (HUD) for the West Cook Homeownership program. Village staff met with Housing Center staff to discuss the organization’s compliance with HUD. All Village funding, CDBG and general revenue, were paused per contractual language set forth in the agreements requiring that the organization is compliant with all HUD regulations and in good standing.
On August 23, 2023, Village staff conducted their annual financial monitoring of the Housing Center. Financial records reflected that Housing Center staff had not been paid for multiple pay periods. Three consecutive pay periods were missed (a total of 7 weeks), beginning March 2023. Housing Center staff did not receive payment for that period until early August 2023. At the time of the Village’s financial monitoring, Housing Center staff were still waiting for their wages for the months of July and August. Additionally, Village staff were concerned by the list of outstanding aging payables owed by the Housing Center. Village staff met with Housing Center staff to address these concerns and decided to move forward with an external performance review of the organization.
An external performance review was conducted in November by Kolnicki, Peterson & Wirth (“KPW”). KPW’s performance review was inconclusive because the auditors did not receive complete financial documentation from the Housing Center. There was a total of seven (7) extensions granted to the Housing Center to provide the documentation requested.
On January 25, 2024, Village staff met with the Housing Center and KPW to discuss the Village financial monitoring, KPW’s performance review, and next steps. The Housing Center contested KPW’s report as inconclusive. The Housing Center requested a 45-day extension to reconcile their financial records submitted and provide the Village with proper and complete documentation for review. This request was denied, as the Village thought it would be in the Housing Center’s best interest to focus on strengthening the organization’s operations and financial oversight.
On February 16, 2024, Village Manager Kevin Jackson sent a letter to the Housing Center that requested the organization prepare a corrective action plan. The plan was intended to restructure the Housing Center’s operations and financial oversight to comply with the Village expectations set forth in the funding grant agreement.
The Housing Center submitted a corrective action plan on March 4, 2024. This plan outlined the measures the organization would take moving forward to address the Village’s concerns. Since its submittal, Village staff has met twice with the Housing Center Executive Director and some of the Housing Center board members to collaboratively address concerns.
On April 11, 2024, the Village adopted the Strategic Vision for Housing Plan prepared by the Metropolitan Mayors Caucus. Strategy number seven within this plan is “Evaluate Future Support of the Oak Park Regional Housing Center’s Live in Oak Park Program Dependent on How it Evolves to Better Meet Housing and Integration Challenges.” The Plan outlines the challenges with the program faced by the Housing Center. The Plan also suggests additional monitoring and communication regarding all programs managed by the Housing Center in order to maintain their intended purposes and to amplify racial integration as a priority within the Village.
HUD reinstated the Housing Center on October 10, 2023, on a probation period to end April 10, 2024. The stipulations set forth by HUD would determine the Housing Center’s active status. This probation period was extended to October 10, 2024. Due to HUD’s extension of the Housing Center’s probationary period, the center’s application for CDBG funds for program years 2022 and 2023 were ineligible.
The Housing Center also applied to the Village’s spring 2023 request for proposals for the Affordable Trust Fund. This application has been paused and has not been reviewed by the Housing Programs Advisory Committee (“HPAC”). Previously, the Housing Center had submitted two request for funds from the Affordable Trust Fund. A request was made in the amount of $200,000 for a grant to hire a Grants Manager and a Office Manager. A second request was made in the amount of $150,000 for a low-cost loan, as a line of credit to assist with the cash flow issue. Both requests were considered by the Village Board on February 13, 2023 but were not approved for funding from the Affordable Trust Fund.
DEI Impact
The Village Board’s adopted Goals, Priorities, Key Projects, and Initiatives outlines goals and projects supporting Racial Equity and Community Affordability. A large portion of that work focuses on integration and supporting continued diversity in rental and owner-occupied housing. The Housing Center manages the Live in Oak Park program and serves as the marketing agent for the Multi-Family Housing Incentive Program, both with a focus on integration and supporting continued racial and economic diversity in rental and owner-occupied housing.
Alternatives
If the Village Board decides to fund the Oak Park Regional Housing Center, Village staff will return with a Funding Grant Agreement for Village Board consideration. Village staff will also prepare a budget amendment to reallocate the funds from the Neighborhood Services Administration External Support account into the proper GL account. Below are potential alternatives for Village Board consideration.
Alternative 1: The Village Board can direct staff to continue the pause the funding of the Housing Center until the organization is fully reinstated by HUD.
Advantages:
• The Housing Center would be able to focus on complying with the stipulations set forth by HUD for full reinstatement of the organization to active status.
Disadvantages:
• The Housing Center will not have the funding to continue operation of the Live in Oak Park program.
Alternative 2: The Village Board can direct staff to fund the Housing Center at a lesser amount than their traditional annual funding of $300,000 and put the organization on a probation status for the remainder of Fiscal Year 2024.
Advantages:
• The Housing Center will have sufficient funds to operate the Live in Oak Park program for this fiscal year. This will also allow for a level of accountability to be measured by Village staff, whom will then report to the Village Board on the status of the Housing Center’s probation.
Disadvantages:
• The Housing Center will continue to have a cash flow issue as they ended FY 2023 with a deficit of approximately $356,617.
Alternative 3: The Village Board can direct staff to fund the Housing Center at the traditional amount of $300,000.
Advantages
• The Housing Center will have sufficient funds to operate the Live in Oak Park program without additional stipulations outside of the contractual terms.
Disadvantages:
• There would be no accountability measures for the Housing Center regarding the corrective actions presented in their response plan. There is a potential risk that the Housing Center could continue improper financial or operational oversight.
Alternative 4: The Village Board can agree to fund the request made by the Housing Center of receiving the balance of funds from CDBG program year 2022 and the fiscal year 2023 Partner Agency Funding Grant Agreement, and $400,000 for fiscal year 2024.
Advantages
• The Housing Center will have sufficient funds to operate the Live in Oak Park program and pay any outstanding expenses from 2023.
Disadvantages:
• There would be no accountability measures for the Housing Center regarding the corrective actions presented in their response plan. There is a potential risk that the Housing Center could continue improper financial or operational oversight. Additionally, due to the Housing Center being on a probationary period, the Village would be liable to repay HUD for any CDBG funds given to the organization during this period, should they no longer be recognized as a HUD approved agency.