RDA flags CDBG, lateral and recordkeeping issues as it readies infill-lot sales

The RDA received an update on infill lots and CDBG compliance that flagged possible complications for future sales. The executive director said the city reassessed values for several infill parcels and discovered that many had been acquired with Community Development Block Grant funds, which triggers federal rules about sales and intended beneficiaries.

"If CDBG has touched the land in any way, then it has to be connected to LMI in some way, shape or form," the executive director said, explaining why market-rate sales require careful review. Staff told the board they are working with finance to create a new fund to hold proceeds from market-rate sales that must be returned to the CDBG program and are reviewing purchase records to determine whether past transactions create audit exposure.

Staff described finding lateral-connection issues (utility laterals from mains to curb stops) on several lots; those laterals will require inspection with camera equipment and, in some cases, repairs or developer-led connections before a lot is marketed as immediately buildable. The director said the city is compiling permitting and purchase history, lateral statuses and other metadata in a spreadsheet to avoid bringing sites forward until staff are confident of the lot information.

Board members asked whether previously sold lots that supported LMI projects would remain compliant; staff said those tied to LMI outcomes (for example, Habitat projects) remain acceptable to sell at reduced prices, but lots being sold for market-rate owner or rental housing must be sold at market value.