Community Development (CD) staff recommend approval of the amended Sage Tower Community Development Block Grant (CDBG) Development Agreement. The amendment removes the City's procurement provisions, allowing the rehabilitation project to advance toward construction in a timely manner while requiring the developer to comply with all applicable federal procurement standards per the award of CDBG and HOME funds. 

On May 11, 2026, City Council approved a $750,000 allocation of CDBG funds through the Affordable Housing Development Program to support the rehabilitation of Sage Tower. This agenda item presents an alternative procurement method for selection of the project's General Contractor. To accommodate this alternative procurement approach and ensure compliance with applicable federal procurement requirements, the CDBG Development Agreement previously approved by Council has been amended with the assistance of the City Attorney's Office and City Purchasing Agent.  

Procedural History: 

• January 16, 2026: Homeword submitted an Affordable Housing Development Program application requesting $750,000 to rehabilitate Sage Tower, including new roofing, windows, mechanical, plumbing and more. 
• April 8, 2026: The City Attorney's Office completed its review of the project's legal agreements.
• May 11, 2026: The City Council approved an allocation of $750,000 for the project.
• June 22, 2026: Homeword contacted staff and initiated the submittal of the attached request to utilize an alternative procurement method for selection of the project's General Contractor.
• June 30, 2026: The City Attorney's Office completed its review of the amended legal agreements associated with the alterative procurement request.

Alternative Procurement Request:
Homeword submitted a request to the City of Billings seeking approval to use an alternative procurement method for selecting a General Contractor. Homeword requested approval to use a Request for Proposals (RFP) process in lieu of the public sealed bid method, while remaining compliant with applicable federal procurement requirements. To accommodate the alternative procurement method, the City’s Development Agreements approved by City Council on May 11, 2026, have been amended with assistance from the City Attorney’s Office and City Purchasing Agent to remove the City’s procurement provisions. The alternative procurement process will continue to comply with federal procurement standards applicable to projects utilizing the City's HUD funding.

The City currently has $750,000 in CDBG funding allocated to the Sage Tower rehabilitation project. The City has an upcoming expenditure deadline for CDBG funding (April 1, 2027). Unexpended funds may be de-obligated by the U.S. Department of Housing and Urban Development (HUD), so facilitating advancement of this project in timely manner supports the City's goals for its CDBG program.

This project serves households seeking housing they can afford in Billings; those experiencing homelessness; at-risk of homelessness. All the individuals and families served by the project will have incomes under 80 percent of the area's median income. Retaining this housing type for Billings residences is critical to supplying affordable and accessible housing to residents of various income levels in the community. 

The City Council may:

• Approve the Development Agreement amendments to allow the alternative procurement method for selecting a General Contractor for the Sage Tower renovations; or, 
• Not Approve the Development Agreement amendments to allow the alternative procurement method for selecting a General Contractor for the Sage Tower renovations. Not having acces to this allowable procurement method may create further barriers to the timely completion of this renovation and rehabilitation project, according to Homeword.