Staff recommends the City Council approve the bid award to Van Arsdale Construction, and the subsequently negotiated Construction Agreement and Final Work List between the City of Billings and Van Arsdale Construction, for the rehabilitation of a single-family home located at 1302 Parkhill Drive.

The City of Billings purchased this HUD-foreclosed property in August 2024 as part of the City's Foreclosure Acquisition / Rehabilitation Program. Under this program, Community Development Block Grant (CDBG) funds are used to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within our community. This property features a one-story 1,013 square foot Cape Cod vernacular-style single-family house, with a full basement and attic, on a 7,000 square foot lot. Following a series of professional inspections to identify issues needing to be addressed, an invitation for Bids (IFB) was developed and advertised with the following result: Van Arsdale Construction:  $379,356

The bid received was significantly higher than City staff's estimate. This may be due to the fact that this home has been determined eligible for the National Register of Historic Places. The rehabilitation work must therefore meet the Secretary of the Interior's Standards for Rehabilitation. The State Historic Preservation Office (SHPO) provided specific guidance, which was included within the IFB.

To lower rehabilitation costs, staff eliminated several non-historical line items and reduced the scope of other line items. A Construction Agreement and Final Work List were subsequently negotiated with Van Arsdale Construction for $262,530.

Because the rehabilitated home will be sold to an income-qualified First Time Home Buyer applicant, all low-income community members are considered stakeholders in the rehabilitation of this housing unit. In addition, neighbors living near the home, who have been dealing with the negative neighborhood impacts of this dilapidated, vacant home for years, are also considered stakeholders. The City Code Enforcement Division received six (6) separate complaints about this property between 2011 and 2022.

City Council may:

• Approve the bid award, Construction Agreement and Final Work List with Van Arsdale Construction; or,
• Not Approve the bid award to Van Arsdale Construction, reject all bids, and provide additional direction to staff. Since only one contractor bid on this project, it may be difficult to get another bid for this work to get this home rehabilitated and back in private ownership.

The Foreclosure Acquisition / Rehabilitation Program utilizes pass-through CDBG funding from HUD. CDBG funding is available to allocate to this project. This program is key to meeting HUD expenditure deadlines for CDBG funding annually, and is a popular program as it both gets people into homes and can significantly improve a neighborhood where a vacant home has been sitting for months or years.

City resources are not used for this program.

Property Sale Price: Following rehabilitation, the property sale price will be the lower of:
1) The post-rehab appraisal amount,
2) The acquisition and rehabilitation costs, or
3) HUD's current maximum purchase price limit for Billings.

Staff recommends the City Council approve the bid award to Van Arsdale Construction, and the subsequently negotiated Construction Agreement and Final Work List between the City of Billings and Van Arsdale Construction, for the rehabilitation of the single-family home located at 1302 Parkhill Drive.