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Council hears proposed CDBG manual updates and Urban Homestead pilot
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Summary
City staff presented edits to the CDBG program manual — tightening income-verification and appeal language, clarifying cleanliness requirements, and proposing a new Urban Homestead pilot with a five-year recapture lien — and recommended barring organizations with staff on the Community Development Commission from applying for public-service funds.
City staff reviewed a set of proposed changes to the Community Development Block Grant (CDBG) program manual that the council will consider at a later meeting.
Miles, a member of city staff leading the CDBG work, said the edits include clarifying that income verification is valid for six months, directing income-determination appeals to the U.S. Department of Housing and Urban Development (HUD), and documenting a longstanding practice that severely cluttered or pest‑infested homes are ineligible for rehab because contractors will not enter them. "If you do not disclose all of the income information to us, you are disqualified," Miles said, describing the proposed application rule.
The presentation also explained warranty and contractor-return provisions. Staff said rehab projects will continue to carry a one‑year warranty, and the manual clarifies what happens when homeowners refuse to allow the contractor back to complete warranty work.
On public‑service grants, staff proposed tightening conflict‑of‑interest rules so that if an organization has a staff member serving on the Community Development Commission (CDC), that organization would be ineligible to apply for CDBG public‑service funding. Miles said HUD raised concerns about perceived conflicts and staff recommends ineligibility for such organizations rather than partial recusal. The city attorney advised that recusals at the council level remain discretionary under the relevant rules but that HUD's parameters require a stricter approach for CDC membership.
Staff also described a new Urban Homestead pilot designed to acquire vacant or abandoned properties for gut rehabilitation and resale to income‑qualified buyers. Miles said the program would prioritize vacant, tax‑auctioned or land‑bank properties and be funded by a mix of CDBG dollars and grant funds, including approximately $40,000 from a Strong Communities grant toward each of two pilot houses. He said one pilot was managed by an outside general contractor and the other was run in‑house by staff; the in‑house project saved roughly $80,000 relative to the contractor‑managed job. "The house, once acquired, will undergo a full gut rehab," Miles said.
The proposed policy for homestead sales would place a five‑year recapture lien on the property equal to the cost of the rehab; the lien would be forgiven if the buyer remained in the home for five years, and staff described limited exceptions (for example, death or certain health conditions).
Council members asked whether spousal relationships require recusal; the city attorney said HUD's statute reads to include "you or your spouse," and that council members could still exercise discretion at the council level in some instances. Miles said staff would apply a fair‑procurement process to select realtors for program sales and would include the city's stated preference for Rock Island–based services.
The presentation concluded with staff asking the council to consider the ordinance later in the evening; staff invited questions and said they would bring the item forward for formal action.
