The City Council adopted Resolution #13-19241 Intent to Dispose of Property in Block 206 Town of Billings, at their February 11, 2013, meeting. The property is more commonly known by its address of 502 South 33rd Street. The property was the former Irma House II, a non-compliant U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnership (HOME) project.

Irma House, Inc. and the City of Billings signed a Voluntary Agreement, dated September 6, 2012, for Irma House, Inc. to vacate said property by January 2, 2013, and transfer ownership by Warranty Deed to the City of Billings. This allows the City to pursue a property sale to recoup the HOME funding of $130,146 provided to Irma House, Inc. for the development of a six-unit transitional home for Irma House II clients. The property transfer was completed January 2, 2013.

Staff published the Notice of Public Hearing in the Billings Times on February 28 and March 7, 2013, mailed the Public Notice – Disposition of City Property & Call for Sealed Bids to property owners within 300 feet of the subject property, advertised for sealed bids on the City’s website at www.ci.billings.mt.us/CDland, and scheduled a public hearing for March 25, 2013. Bids were opened on March 12, 2013, and no bids were received.

The City Council may:

• Hold the public hearing as advertised and direct staff to continue marketing the property for sale; or
• Hold the public hearing as advertised and direct staff to retain ownership of the property. The City would be responsible for repaying HUD the full $130,146 and would be responsible for maintaining the property, paying property taxes, insuring the property, paying utilities and other costs associated with property ownership.

Proceeds from the sale of this property will be used to repay HUD the $130,146 the City loaned to Irma House, Inc. to develop a six-unit, affordable, transitional home for men with substance abuse issues. Repayment of the $130,146 is required as a result of non-compliance with HOME Program regulations.

The City will recoup from the sale the amount the City paid for the appraisal, closing costs, recording fees, and any other directly-related expenses.

If the property sells for more than $130,146 plus the cost of the appraisal, closing costs, recording fees, and other directly-related expenses, the remainder will be transmitted to Irma House, Inc. to enable the organization to recoup some or all of their equity investment in the property.

The City of Billings and Irma House, Inc. signed and recorded a series of legally enforceable documents between January 2003 and April 2005. These documents included:

• Deed Restriction Agreement stating the City of Billings loaned $30,000 in HOME funds to Irma House, Inc. for the purpose of providing assistance for the acquisition and site clearance costs for the property located at 502 South 33rd Street, Billings.
• Montana Trust Indentures.
• HOME Community Housing Development Organization (CHDO) Construction Development Agreement that states Irma House, Inc. received a loan of $98,966 to build affordable transitional housing on property at 502 South 33rd Street.
• Deed Restriction Agreement stating the City of Billings loaned $98,966 in HOME funds to Irma House, Inc. for the purpose of new construction of a six-bedroom transitional housing project commonly known and addressed as Irma House II, located at 502 South 33rd Street.

Although the City of Billings only provided loans to Irma House for a total of $128,966 ($30,000 in 2003 plus $98,966 in 2005), it is the total HOME investment of $130,146 that must be repaid to HUD as a result of non-compliance with HOME regulations. See attached list of Irma House II project expenditures.

There are no “forgiveness provisions” included within the Deed Restriction or Trust Indenture documents. Therefore, notwithstanding the non-compliance issues, these zero interest, deferred loans become due and payable to the City of Billings under one or more of following conditions:

• The properties are no longer used as Irma House transitional housing for men with alcohol and/or other substance abuse issues,
• The facility is not in compliance with HOME Program requirements,
• The properties are refinanced, and/or
• The properties are sold.  

Irma House, Inc. was notified via certified mail on May 17, 2012, that the City of Billings Community Development Division considered Irma House II to be in substantial non-compliance with HOME program regulations. At a subsequent meeting with Irma House’s Executive Director, its attorney, and City staff, all parties agreed that Irma House, Inc. would voluntarily vacate the property so the City could pursue the sale of the property to repay HUD the HOME funds provided.

A Voluntary Agreement dated September 6, 2012, was signed by all parties. The agreement stipulates the following:

Irma House, Inc. signed the Warranty Deed and Realty Transfer Certificate on January 2, 2013, and the City took possession of the property.

The Community Development Division is following established City policies and procedures to dispose of this property. The City Council adopted Resolution 13-19241 of Intent to Dispose of Property at their February 11, 2013, meeting.

The Community Development Division will adhere to Billings Municipal City Code (BMCC) Section 22-900 - sale, disposal or lease of city property.