After much debate, the Jefferson City Council plans to hold off addressing a Lafayette Street property until it receives a final agency decision from a federal government agency regarding whether the city owes back nearly $80,000.
In a 5-4 vote Monday evening, the council directed city staff to seek a formal declaration or final agency decision from the United States Housing and Urban Development regarding whether the city must return $78,329 it invested in 408 Lafayette St. from 2009-12.
Council members Mark Schreiber, Erin Wiseman, Ron Fitzwater and Carlos Graham voted against the motion, while council members Rick Prather, Jon Hensley, Ken Hussey, Laura Ward and David Kemna voted in favor. Ward 2 Councilman Rick Mihalevich was not present at Monday's meeting.
Jefferson City purchased 408 Lafayette St. in 2009 and invested $78,329 using funds from the HUD's Neighborhood Stabilization Program. The city originally planned to rehabilitate the property in hopes of selling the property to a low- to moderate-income family, Jefferson City Neighborhood Services Manager Jayme Abbott said.
The city ceased activity on the property in 2012 after the Federal Emergency Management Agency redrew the floodplain maps and added the property in the 100-year floodplain. The city cannot use federal dollars on a property located in the floodplain, city staff previously said.
HUD announced more than a year ago it planned to eliminate the program and asked municipalities to close out projects that utilized NSP funds. The Missouri Department of Economic Development, working with HUD, told the city in October it needs a plan of action regarding closing out 408 Lafayette St. by the end of this month.
City staff gave the council a few options Monday, ranging from demolishing 408 Lafayette St. to returning the NSP funds by using general fund revenue.
While city staff has contacted numerous individuals regarding the city's situation, Hensley said, HUD has not issued an official decision regarding whether the city must return the funds.
"Us remedying this is based on us doing something wrong," Hensley said. "We have federal employees who have reached some kind of decision but I don't know if we have a final agency decision."
Hussey agreed, noting the city spent the funds within the constraints of the program at the time but the federal government "changed the rules" suddenly.
"When we accepted the dollars and spent them, we did so in the constraints of this program," he said. "FEMA changed the rules on this property, not us. We didn't make a local determination, so ultimately, if the federal government comes calling, asking for their money, they're doing so because they changed the rules regarding what they think you should do with it now. I tend to think there is an argument that we could keep our $80,000 because we used it correctly at the time and not feel like we have to demolish (408 Lafayette St.) or give the money back."
If Jefferson City didn't have to return the funds, City Counselor Ryan Moehlman said, the city would be in a situation where it would have to rehabilitate the property. However, with the property being in the floodplain, it must meet FEMA's regulations that states rehabilitation cannot exceed 50 percent of the property's value. Moehlman said he was doubtful the city could revitalize the property and meet that threshold.
Since the council is not giving the Department of Economic Development its final plan, Graham said, he was worried pushing off a decision regarding 408 Lafayette St. would hurt the city's standings when applying for future grants.
City staff recommended demolishing the building as it would closeout the project and not require the city to return funds. It would also be compliant with federal floodplain regulations and the city's floodplain code, which discourages building in a floodplain, said Sonny Sanders, Jefferson City Planning and Protective Services director.
The council voted to demolish 408 Lafayette St. earlier this year, but the Jefferson City Historic Preservation Commission denied the demolition clearance permit. City staff filed an appeal to the demolition but has not acted on that appeal.
The council rejected Fitzwater's motion 5-4 to proceed with the demolition appeal process. Prather, Hensley, Hussey, Ward and Kemna voted against the motion, while Schreiber, Wiseman, Fitzwater and Graham voted for it.
The city tried to sell 408 Lafayette St. earlier this year and received a lone bidder but the council did not accept the bid.
Last year, the city initially planned to demolish 408 Lafayette St. but was met with push-back from area residents. To discourage demolition and potentially relieve some floodplain regulations, residents applied to be the city's first local historic district in January, with the city approving the designation in September.
Also Monday, the City Council declared the old Fire Station No. 2 as surplus, allowing the Jefferson City Fire Department to proceed with selling the property. The old Fire Station No. 2 is located at 2400 E. McCarty St.
Located at 3025 Robinson Road, the 10,500-square-foot new Fire Station No. 2 is taking shape. Curtis-Manes-Schulte Inc. hopes to finish constructing the $2.9 million building in late spring or early summer 2019.
The council also approved an ordinance that will update the city code's language to state residential, commercial, industrial and governmental establishments connected to public sewers will be charged. City code currently states the city should charge not only those connected to the public sewers, but also residential, commercial, industrial and government properties that are not connect to the public sewer but has sewer service available.
The city has not charged the fixed minimum monthly rate to vacant or abandoned establishments that have available sewer services, Jefferson City Finance Director Margie Mueller said.