Developers ask county to reassign HUD disaster-grant awards to nonprofit lender to protect low-income housing tax credits

What happened: At the Feb. 25 meeting Sarasota County staff presented three requests from developers who had earlier received Resilient SRQ CDBG-DR awards from the county’s 2022 allocation. Lincoln Avenue Communities requested (a) to change the approved site for its Chamberlain Family Apartments project and (b) to have the county execute the grant agreement with Fairview Housing Limited — a national nonprofit — rather than with Lincoln Avenue directly. McDowell Housing Partners requested the same subrecipient change for its ECOS at Arbor Park 2 award.

Why: Developers said the awards were compatible with planned affordable housing projects financed with Low-Income Housing Tax Credits (LIHTC). Federal grant dollars treated as direct grants to a project can reduce LIHTC eligible basis and thereby reduce the tax-credit equity that pays for the project. Developers and the county staff said routing the HUD grant through a nonprofit (Fairview Housing) that would make a low-interest loan to the developer preserves the project’s financing structure and avoids what they called “negative tax implications.”

Board action and context: Commissioners voted unanimously to permit (a) Lincoln Avenue’s site change for the Chamberlain Family Apartments and (b) the reassignment of the county’s existing CDBG-DR awards from Lincoln Avenue and McDowell to Fairview Housing Limited, subject to agreements that protect county and federal compliance and assure funds are spent on the intended projects. Steve Hyatt, division manager for program management, told the board staff will require documentation of project expenditures and strict subrecipient agreements to avoid duplication of benefits and to preserve auditability.

What it means: Staff and the developers described the arrangement as a common workaround for LIHTC-financed projects using federal grants. Commissioners asked for clarity on Fairview’s administration fee and oversight; developers said Fairview’s fees would be minimal and that the nonprofit has prior experience in similar transactions. Hyatt said staff would draft subrecipient agreements and legal terms that reduce county liability and provide required HUD reporting.

Next steps: Staff will negotiate and circulate subrecipient agreements and bring final grant documents to the board as routine contract/work assignment approvals. County staff emphasized that no HUD grant dollars will be disbursed until the county has signed compliant subrecipient contracts and verified project budgets and costs.