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File #: 2022-1929   
Type: Regular Agenda Item
Body: City Council
On agenda: 6/7/2022
Title: Public Hearing to Consider Adoption of the Community Development Block Grant/HOME Investment Partnerships Program Fiscal Year (FY) 2022-23 Action Plan; Authorize the Interim City Manager to Use Affordable Housing Unit Fee and Permanent Local Housing Allocation Funds; and Authorize the Interim City Manager to Negotiate and Execute Related Documents, Agreements, and Modifications at Funding Levels Approved by Congress. (Community Development 203, 201, 208 & 222)
Attachments: 1. Exhibit 1 - Draft Action Plan, 2. Exhibit 2 - Draft Summary of Activities, 3. Presentation

Title

 

Public Hearing to Consider Adoption of the Community Development Block Grant/HOME Investment Partnerships Program Fiscal Year (FY) 2022-23 Action Plan; Authorize the Interim City Manager to Use Affordable Housing Unit Fee and Permanent Local Housing Allocation Funds; and Authorize the Interim City Manager to Negotiate and Execute Related Documents, Agreements, and Modifications at Funding Levels Approved by Congress. (Community Development 203, 201, 208 & 222)

 

Body

 

To: Honorable Mayor and Members of the City Council

 

EXECUTIVE SUMMARY

 

The City of Alameda (City) is an entitlement recipient of Community Development Block Grant (CDBG) funds from the U.S. Department of Housing and Urban Development (HUD). Fiscal year (FY) 2022-23 represents the third year of implementation for the five-year Consolidated Plan, which is a planning document required by HUD to be submitted by all jurisdictions that directly receive HUD funds. Recommendations for program funding for Public Services is included in Exhibit 2.

 

HUD has awarded $1,139,561 in CDBG funds to the City for FY 2022-23. As a member of the Alameda County HOME Partnership Investment Program (HOME Consortium), the City has also been awarded $245,827 in FY 2022-23 HOME Program funds. The total FY 2022-23 budget for CDBG and HOME is $3,693,578, which includes approximately $1,850,364 of funds carried forward from previous years and projected program income receipts of $72,000. In addition to the federal funds, staff made available through a Notice of Funding Availability (NOFA) $750,000 of Affordable Housing Unit Fee (AHUF) Funds. However, the requests for this funding exceeded $5 million. Staff proposes using $25,000 of Permanent Local Housing Allocation (PLHA) funds to cover a small portion of the gap.

 

This public hearing is an opportunity for the community to provide input on the proposed programs and projects for the upcoming fiscal year that will be funded with CDBG, HOME, AHUF and a portion of the PLHA funds.

 

BACKGROUND

 

The City is an entitlement recipient of CDBG funds from HUD. CDBG funds support programs and activities that benefit low- and moderate-income persons and households and which help prevent or eliminate blight. Each year, entitlement cities must follow a process to receive public input, establish community goals and prepare a budget for the coming year. As a condition of funding, the City is required to submit an annual “Action Plan” to HUD. The Action Plan details the programs, activities and resources that will be used to address the housing and community development priority needs and goals.

 

In preparing the FY 2020-25 Consolidated Plan, the City consulted with various community stakeholders, including community-based service providers, residents, and City departments and boards. The community stakeholders helped establish priority needs and objectives and proposed strategies in the form of projects and activities to further those objectives. On December 9, 2021, the Social Service Human Relations Board (SSHRB) discussed priority needs and made a recommendation to the City Council regarding public service needs for the upcoming fiscal year. A public hearing regarding public service needs was held at the City Council’s January 4 meeting. No written comments were received and the City Council adopted the needs statement as recommended by the SSHRB.  On January 18, staff posted a Notice of Funding Availability (NOFA) and Request for Proposals (RFP) for CDBG, HOME and AHUF funds.

 

CDBG funding for the upcoming fiscal year is derived from two sources: CDBG entitlement funds that are allocated by HUD and program income that is generated from CDBG loan repayments. HUD has awarded the City $1,139,561 in CDBG entitlement funding for FY 2022-23. Program income is generated from CDBG loans that have been issued through the residential rehabilitation programs.  Because this program income will continue to be received through June 30, 2022, the actual amount of program income has yet to be finalized, but is estimated to be $72,000.

 

In order to adhere to HUD timing requirements, staff has prepared recommendations for a CDBG allocation of $1,139,561 for the FY 2022-23 Action Plan period, and an estimated $72,000 in program income from CDBG loan repayments in FY 2022-23. In addition, as a member of the Alameda County HOME Consortium, the City has been awarded $245,827 in HOME funding from the County as a subrecipient. Additionally, based on City Council direction given at the the December 7, 2021 City Council meeting, staff made available $750,000 of AHUF funds for housing development through a NOFA.

 

The City has taken steps to meet the citizen participation requirements, including noticing an open and public hearing, with publication of the notice in the April 1, 2022 Alameda Sun newspaper, as well as in Chinese, Spanish, Tagalog, and Vietnamese-language newspapers. Accommodations are also available for non-English speaking residents and persons with disabilities to participate in the public comment process. 

 

DISCUSSION

The City is one of eight jurisdictional members of the HOME Consortium through which the County allocates portions of its HOME allocation to participating jurisdictions. Each member of the HOME Consortium must prepare its individual Action Plan.  As the lead agency, Alameda County coordinates the timing and final submission of the Action Plan to HUD.

 

CDBG Funding Allocation

 

The City prepares an annual Action Plan that identifies specific objectives and the proposed uses of CDBG funds. The Action Plan funding recommendations are based on needs identified through a number of community meetings and reports, including:

                     Alameda County report on Analysis of Impediments to Fair Housing

                     Alameda County EveryOne Home reports

                     City Council Annual Public Needs Hearing

                     City of Alameda Community Needs Assessment

                     Consultation with community-based organizations

                     Domestic Violence Task Force

                     SSHRB meeting on public services needs

                     Road Home: A 5 Year Plan to Prevent and Respond to Homelessness in Alameda

 

The draft FY 2022-23 Action Plan is attached as Exhibit 1.  The proposed activities for FY 2022-23 are intended to address both the current urgent needs that arose from the coronavirus and subsequent shelter-in-place orders while also preparing the City and its most vulnerable residents for recovery from the pandemic. 

 

Public Services

Funding for the next fiscal year is derived from two sources: entitlement funds that are allocated by HUD and program income that is generated from CDBG loan repayments. HUD requires that public services funding be capped at 15 percent of the total current year’s grant allocation plus program income received in the previous fiscal year. Because the program income will continue to be received through June 30, 2022, the actual amount of program income is to be determined. The current year CDBG entitlement is $1,139,561 and the estimated program income for FY 2021-22 is approximately $299,000.  As a result, the maximum CDBG that may be allocated to public services is to be $215,927.

 

Staff reviewed the public service funding requests and estimated amount of CDBG funds available for public services at the March 24 SSHRB meeting. At this meeting, it was shared that the funding requests of $270,773 were in excess of the estimated funding available. After the presentation, the SSHRB heard public comment and approved funding recommendations as well as a plan for pro rating any additional funds received before the end of the fiscal year. The attached FY 2022-23 Action Plan Summary of Activities Recommended for Funding (Exhibit 2) reflects SSHRB’s recommendations.  In order to fund the service providers at the amounts shown, information and referral services will be paid for with CDBG administrative funds and the first $25,000 of Midway Shelter expenses will be paid with funds from the PLHA fund.  Supplementing the CDBG funding with these two sources of available funds is necessary to fund the public services.

 

CDBG Provider Past Performance

In accordance with HUD requirements, following is data on service provider past performance under the current contracts. Listed below are the CDBG-funded service providers who applied for funding, their service offerings, annual goals for number of people served, and the actual number of persons who benefited from the program in FY 2020-21:

 

 

Service Provider

Service Offering

Annual Goal

FY 20-21

Alameda Family Services

Mental Health Counseling

45

55

Alameda Food Bank

Emergency Food Distribution

2,200

10,537

Building Futures

Shelter & Counseling

85

120

Eden Council for Hope &

Fair Housing Counseling

65

69

Opportunity (ECHO)

 

 

 

Eden Information & Referral

Information & Referral

350

397

Family Violence Law Center

Family Violence Prevention

25

43

Legal Assistance for Seniors

Legal Assistance for Alameda Seniors

48

67

Alameda Point Collaborative

Economic Development

10

23

 

Due to the COVID-19 pandemic and its economic impact on community members, the number of low-income households and the need for services has increased dramatically during the past two years.  Fortunately, all of the service providers were able to adapt their service delivery models and, as a result, all of the service providers exceeded their annual goals.

 

Public Improvements 

The City received two applications for public improvement projects for the upcoming fiscal year, one from the Alameda Boys & Girls Club (ABGC) and another from Island City Development, a non-profit affiliate of the Alameda Housing Authority, for a total request of $864,311. ABGC requested $264,311 to design, plan, and obtain permits (as applicable) to pave the driveway from Third Street to the end of the parking lot, which spans 625 feet with variable widths. Island City Development requested $600,000 to make site and infrastructure improvements at the North Housing Site to prepare for the future development of 45 units of permanent supportive housing. The project is anticipated to assist 45-90 persons. Staff contacted ABGC to find out what level of funding would allow the project to progress and ABGC staff confirmed that the full amount is needed to complete the project within 12 months and that a smaller amount might result in breaking the project in two phases - one for planning and a subsequent year for getting the work done. Staff has proposed that ABGC be funded up to its full request and that Island City Development be awarded the remaining available funds of $321,927 plus any additional funds that become available up to the full request of $600,000.  Funds may become available after the City Council meeting in one of the following ways:

1) CDBG loans are paid off in full in advance of the due date; and

2) CDBG projects have leftover funds.

 

 

 

Residential Rehabilitation

Due to staff transitions at both the Alameda Fire Department, which manages the Housing Safety Program, and the Community Development Department, staff is proposing to publish a Request for Proposals for a third-party administrator of the Residential Rehabilitation Program.  This model has been successfully implemented by Albany, Berkeley, San Leandro and Union City.  The administrator would be responsible for the following types of work: updating program guidelines and priorities, marketing the program, fielding inquiries, developing a scope of work, preparing loan documents, and construction management. Consequently, residential rehabilitation is minimally funded pending staffing of the administrator.

 

Substantial rehabilitation funds have been allocated as is required per the Guyton Settlement.  While staff received an application for a residential rehabilitation loan of $195,000 at a 186-unit building, there are not sufficient funds available to fund the request in the upcoming fiscal year. 

 

Administrative Funds

Administrative funds have been included as permitted by HUD guidelines.  As described in the public services section, by paying for Eden Information & Referral services with CDBG administrative funds, more public service funds are available for the remaining service providers.

 

Carry-Forward Funds

Carry-forward funds are for projects that are in progress with appropriated but unexpended funds from the prior year.  Per HUD requirements, carry-forward funds are encumbered within the same grant year until a project is completed or a replacement project is identified and funds are reprogrammed to the new project. Based on project balances as of April 30, 3033, the Action Plan includes approximately $1,850,364 of carry-forward funds; $385,826 of these funds are from completed project and have been made available to fund the proposed projects.

 

HOME & Affordable Housing Funding Allocation and Activities

As a member of the HOME Consortium, the City has been awarded $245,827 in FY 2022-23 HOME funds of which approximately $14,041 may be used for administrative purposes. As stated in the NOFA, all applicants for HOME housing development funds were considered for Affordable Housing funds as well. 

 

The City received three applications totaling $3,163,000 in HOME funding requests. Mercy Housing requested $1,250,000 for 1245 McKay Avenue, a 101-unit development for formerly homeless seniors in Alameda. Island City Development requested $1,718,000 to build forty-five units of permanent supportive housing for formerly homeless individuals or households at North Housing PSH I, located approximately at 501 Mosley Avenue. Vue Alameda requested $195,000 for the rehabilitation and conversion of existing marketrate housing at Rica Vista Apartments, located at 1825 Poggi Street, to rentrestricted affordable housing. Staff proposes to split the HOME and AHUF funds between the two permanent, supportive housing projects for formerly homeless individuals, 1245 McKay Avenue and North Housing PSH I. Currently, the City is carrying forward $332,330 of HOME funds that have been allocated to 1245 McKay.  These funds would be made available to the McKay project in addition to those described above.  To comply with HUD requirements, staff will first use the oldest funds available.  All projects will be subject to Davis Bacon wage monitoring and any other federal requirements.

 

ALTERNATIVES

 

In connection with the holding of this public hearing to consider adoption of the CDBG/HOME FY 2022-23 Action Plan, City Council -could receive public input and:

                     Authorize the Interim City Manager to also use AHUF and PLHA Funds; and authorize the Interim City Manager to negotiate and execute related documents, agreements, and modifications to implement the programs described above.

                     Direct staff to consider other new programs for funding as long as those programs are consistent with HUD guidelines (e.g., assistance is limited to low-income residents, funding caps are followed, etc.).

                     Modify staff’s recommendations, such as by making changes to the programs to be funded or revising the proposed funding allocation among the proposed projects as long as those changes are consistent with HUD guidelines.

                     Decline to move forward with adopting the proposed CDBG/HOME FY 2022-23 Action Plan at this time, which would result in the loss of CDBG and HOME funding for the upcoming fiscal year.

 

FINANCIAL IMPACT

 

There is no impact to the General Fund to approve the FY 2022-23 CDBG/HOME Action Plan. The funds described in this report have been budgeted in the CDBG Fund (203), HOME Fund (201), Affordable Housing Fund (208), and Permanent Local Housing Allocation Project (G24100).

 

MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE

 

The proposed Action Plan is consistent with the City’s CDBG Five-Year Strategic Plan and citizen participation requirements. 

 

ENVIRONMENTAL REVIEW

 

The execution of related agreements and final funding commitments are subject to the requirements of the National Environmental Policy Act (NEPA) and satisfactory environmental clearance pursuant to 24 CFR Part 58. Additionally, the proposed action is not a project pursuant to California Environmental Quality Act (CEQA) because it is an organizational or administrative activity of the City that will not result in direct or indirect physical changes in the environment (CEQA Guidelines, section 15378 (b) (5)) and therefore no environmental review is required.

 

CLIMATE IMPACT

 

There are no identifiable climate impacts or climate action opportunities associated with the subject of this report. 

 

RECOMMENDATION

 

Conduct a public hearing to consider adoption of the CDBG/HOME FY 2022-23 Action Plan; authorize the Interim City Manager to use affordable housing unit fee and permanent local housing allocation funds; and authorize the Interim City Manager to negotiate and execute related documents, agreements, and modifications at funding levels approved by Congress.

 

Respectfully submitted,

Lisa Nelson Maxwell, Community Development Director

 

By,

Lisa Fitts, Community Development Program Manager

 

Financial Impact section reviewed,

Margaret O'Brien, Finance Director

 

Exhibits: 

1.                     Draft FY 2022-23 Action Plan

2.                     Draft FY 2022-23 Summary of Activities

 

cc:                     Dirk Brazil, Interim City Manager

Social Service Human Relations Board