Every year since 2014 Redmond has received Community Development Block Grant funds to award to local nonprofits for projects that support low- to moderate-income residents’ employment and housing needs.

The city has to spend 50 percent of each year’s grant on housing, according to the rules for the grants from the U.S. Department of Housing and Urban Development.

This year’s 2016-2017 housing money — more than $113,000 — went unclaimed because no one applied for it, the first time that’s happened since the city started receiving the grant money. But according to discussion at this month’s meeting of Redmond’s Housing and Community Development Committee, the city has also run into roadblocks to granting during the 2014-2015 and 2015-2016 funding cycles.

One project, a 2014-2015 proposal from Families Forward Inc., to create a community of eight manufactured homes, which was awarded more than $95,000, was recently denied by HUD.

According to Redmond Community Development Director Heather Richards, HUD had originally approved the idea more than a year ago, but then it turned out that the way the money was going to be used wasn’t allowed by Community Development Block Grant rules.

“For CDBG funds to be used for housing, there’s not much it can be used for except for land acquisition,” Richards said, adding that the final word on the project hasn’t been determined, but she suspects HUD will ultimately say no.

The other project, a Housing Works affordable housing project called Cook Crossing, ran into a different obstacle. Housing Works, a regional housing agency, chose to decline the $105,000 block grant, which the city awarded it in 2015-2016. The project is still moving forward; construction on the 48-unit apartment building for seniors directly south of Lowe’s Home Improvement is slated to start this summer. But Housing Works decided to use other, less-restrictive funding to do it.

“Housing Works declined (the funds) because HUD said they couldn’t fund the property acquisition,” Richards said.

The reason the money couldn’t be used for the property acquisition, Richards said, was because a subsidiary of Housing Works — the entity it uses to buy and sell land — already owned the property, and such a sale violated HUD’s conflict of interest rules.

So now the city will have to find new projects to fund with the money, or risk losing it all together.

“(HUD) has assured us that they’ll work with us so that we don’t lose the funds,” Richards said, noting that the city had received a letter from HUD about the Families Forward project that stated Redmond hasn’t been timely in distributing its funds. “One of my counter arguments to them was that their representative originally approved the project. To come back 12 and 14 months later and tell us it’s not … I get that rules are rules, but they need to be a partner in this process.”

With the unclaimed 2016-2017 money included, which will be added to next year’s housing grant award, the city could now have more than $300,000 to give away for housing projects.

Richards said that the city will put together a request for proposals over the next few months to try to re-award the money that would have gone to Families Forward and Housing Works. On the surface it sounds like a good thing, but considering the strict block grant rules, time frames, and the fact that no one even applied for this year’s funds, there’s concern about what will happen with the money.

“It is so difficult to get this money out for housing …” said Geoff Wahl, financial director for Housing Works and a member of the city’s housing committee. “I guess I worry about the application window you have; that might be why we’re not getting more applicants. When you think about a transaction to buy land, you have to find a willing seller that has land that works for multifamily and is willing to wade through the process that HUD makes you go through.”

— Reporter: 541-617-7829,

awest@bendbulletin.com