Title
Public Hearing to Consider Adoption of the Community Development Block Grant/HOME Investment Partnerships Program Fiscal Year 2023-24 Action Plan; Authorize the City Manager to Use Permanent Local Housing Allocation Funds; and Authorize the City Manager to Negotiate and Execute Related Documents, Agreements, and Modifications at Funding Levels Approved by Congress. (Community Development 203, 201 & 222)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
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) 2023-24 represents the fourth 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. The draft Action Plan is attached as Exhibit 1 and a summary of the recommendations for program funding is included as Exhibit 2.
The total FY 2023-24 CDBG program budget is $3,423,555, which includes $1,123,711 in CDBG entitlement funds, $2,083,621 of carried forward funds for open projects, $156,223 of carried funds from completed projects and $60,000 of program income that is projected to be received during the fiscal year from loan repayments. HUD regulations require that no more than 15% of the sum of CDBG entitlement funds plus the previous year’s program be allocated to public services, therefore, $180,556 is available for public services. However, staff received public service funding requests of $303,395. Consequently, with support from the Social Service Human Relations Board, staff proposed using up to $102,505 of Permanent Local Housing Allocation (PLHA) funds to pay for Midway Shelter expenses and to pay Eden Information & Referral with CDBG administrative funds.
As a member of the Alameda County HOME Partnership Investment Program (HOME Consortium), the City was also awarded $238,909 in FY 2023-24 HOME Program funds. The total HOME budget of $1,134,526 includes $895,618 of carried forward funds.
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 and 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 as well as to 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 1, 2022, 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 City Council’s January 3, 2023 meeting. No written comments were received, and City Council adopted the needs statement as recommended by SSHRB. On January 10, staff posted a Notice of Funding Availability (NOFA) and Request for Proposals (RFP) for CDBG and HOME 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 $1,123,711 in CDBG entitlement funding for FY 2023-24. Program income for FY 2022-23 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, 2023, the actual amount of program income has yet to be finalized but is estimated to be $80,000.
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 an individual Action Plan. As the lead agency, Alameda County coordinates the timing and final submission of the Action Plan to HUD. On April 18, 2023, City Council approved the City’s continued participation in the HOME Consortium. As a member of the Alameda County HOME Consortium, the City was awarded $238,909 in FY 2023-24 HOME funding from the County.
The City met the citizen participation requirements for this public hearing, including noticing the public hearing in the March 30, 2023, Alameda Sun newspaper, as well as in Chinese, Spanish, Tagalog, and Vietnamese-language newspapers. While staff has not identified local Arabic or Korean language media, the public notice is also posted on the City web site and can be translated into all six languages. Accommodations are also available for non-English speaking residents and persons with disabilities to participate in the public comment process.
DISCUSSION
The City prepares an annual Action Plan that identifies specific objectives and the proposed uses of CDBG funds. The draft FY 2023-24 Action Plan is attached as Exhibit 1. The proposed activities for FY 2023-24 are intended to address the current urgent needs that arose from the coronavirus, rising rents, inflation, and the high cost of living while also preparing the City and its most vulnerable residents for recovery from the pandemic.
Public Services
Public services funding for 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, it is an estimated amount of $80,000.
Staff proposes funding allocations using the following assumption:
|
Funding Type |
Amount |
15% of Amount |
|
City of Alameda Entitlement |
$1,123,711 |
$168,556 |
|
FY 2022-23 Program Income (estimated) |
$80,000 |
$12,000 |
|
Total Estimated Funds Available |
$1,203,711 |
$180,556 |
Staff reviewed the public service funding requests and estimated amount of CDBG funds available for public services at the March 23, 2023 SSHRB meeting. At this meeting, it was shared that the funding requests of $303,395 were in excess of the estimated funding available. After the presentation, 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 2023-24 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, Eden Information and Referral will be paid $26,000 from CDBG administrative funds, up to $3,000 of CDBG funds will pay for Midway Shelter expenses, and the remaining $102,505 will be paid with PLHA funds. Supplementing the CDBG funding with PLHA funds is necessary to fund the public services. Staff acknowledges that additional funding sources may not be available in the future and all organizations are encouraged to continue to raise funds to leverage the CDBG that are available.
Economic Development
Alameda Point Collaborative and WeeCare, Inc. submitted applications for economic development funds. Alameda Point Collaborative requested $135,000 to administer a social enterprise designed to create job training and employment opportunities with the goal to serve over 100 Alameda Point Collaborative households. WeeCare, Inc. requested $252,000 to administer a program that provides technical assistance and business support to childcare providers with the goal of increasing revenue potential and stabilizing jobs in the child care industry. The WeeCare, Inc. application does not meet the minimum threshold requirements outlined in the City’s Notice of Funding Availability, including being an eligible public agency or qualified 501(c)(3) or (c)(4) non-profit organization, nor is the application as submitted eligible activity under CDBG/HOME funding regulations. Consequently, staff recommends funding Alameda Point Collaborative at the full amount requested.
Public Improvements
The City received one public improvement project application from Island City Development (ICD), a non-profit affiliate of the Alameda Housing Authority. Last year, ICD requested $600,000 and was awarded $321,927 to make site and infrastructure improvements at the North Housing site to prepare for the future development of 45 units of permanent supportive housing. This year, ICD requested an additional $500,000, and staff proposes to fund $372,116 for the project provided that the funds will be used no later than December 31, 2023, with an option to extend the date to March 31, 2024. Staff recognizes that the project needs the funds to proceed and is dependent on a tax credit award. However, in May 2024, HUD will calculate the ratio of unexpended funds to the annual entitlement award plus program income received (Timeliness Test). The City will need to pass the May 2024 HUD Timeliness Test. In the event that the project appears not to move forward, staff will strive to bring an alternate project in December 2023 as the City will need to fully deploy these funds in order to pass the Timeliness Test.
Residential Rehabilitation
Staff published a Request for Proposal (RFP) on June 9, 2022 seeking a contractor to act as a third-party administrator for the Residential Rehabilitation program. Two non-profits responded after the submittal period of forty (40) days. Staff reviewed the proposals, interviewed qualified firms and selected two service providers that best meet the City’s needs. At the same time, the staff that had supported the Alameda Fire Department’s Housing Safety Program, a component within the Residential Rehabilitation program, were no longer available. Consequently, Community Development Department staff selected Rebuilding Together to work on residential rehabilitation projects that are $15,000 or less and Habitat for Humanity to work on those that are more than $15,000. AFD supported the proposal to transfer its program to Rebuilding Together. The program administrators are responsible for updating program guidelines and priorities, marketing the program, fielding inquiries, developing a scope of work, preparing loan documents, and construction management. In addition, Rebuilding Together is immediately responsible for conducting the lead-based paint visual assessments on all of the units for which landlords received back rent paid by the City’s COVID-19 Emergency Rent Relief program. The lead-based paint visual assessments are a requirement of the CDBG CARES Act funds.
Funds for substantial rehabilitation continue to be allocated as required per the 1990 Guyton Judgment and Settlement Agreement (Guyton Agreement), which requires the City to undertake certain activities to further affordable housing production. Specifically, the Guyton Agreement requires that 15.3 percent of the City’s CDBG entitlement be allocated to the Substantial Rehabilitation Program.
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 February 28, 2023, the Action Plan includes approximately $2,083,621 of carry-forward funds of which approximately $156,223 are from completed projects and have been made available to fund the proposed projects.
HOME
As a member of the HOME Consortium, the City was awarded $238,909 in FY 2023-24 HOME funds of which approximately $13,670 may be used for administrative purposes. The City received two applications totaling $575,000 in HOME funding requests.
Island City Development (ICD), a non-profit affiliate of the Alameda Housing Authority, requested $500,000 to build forty-five units of permanent supportive housing for formerly homeless individuals or households at North Housing PSH I. Alameda Point Collaborative (APC) requested $75,000 to conduct major rehabilitation of 5 homes leased on Alameda Point.
Staff proposes to fund ICD with $225,238 of HOME project funds plus any program income received from the County with the FY 2023-24 HOME agreement. Staff conferred with APC and proposed that they instead apply for CDBG residential rehabilitation funds and has recommended that $75,000 be allocated for that purpose. All projects will be subject to Davis Bacon wage monitoring and any other federal requirements.
Coronavirus Aid, Relief, and Economic Security (CARES) Act Update
On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. CARES Act funding (CDBG-CV) provided supplemental CDBG funding that could be allocated to support public services that provide food and shelter to individuals and families who are vulnerable and in crisis as a result of the pandemic.
The City received $1,280,228 in CDBG-CV funds and used it for programs such as COVID-19 Emergency Rent Relief, Safe Parking and others. At this time, only one program remains open with a balance; Family Violence Law Center’s (FVLC) Emergency Shelter program currently has approximately $24,191.30 CDBG-CV funds remaining. With SSHRB’s support, staff proposed to reduce FVLC’s CDBG-CV funds by $10,000 and move the funds to FVLC’s Direct Legal Services program with the funds split between FY 2023-24 and FY 2024-25. Moving these funds between programs has two benefits: It helps increase the likelihood of meeting HUD timeliness requirements and it frees up CDBG-CV funds for other uses. HUD will be monitoring the City’s use of CDBG-CV funds in April 2023. Since no CDBG-CV funds have been allocated for administrative uses, staff recommends that the newly available $10,000 of CDBG-CV be allocated to pay Resource Consultants for work related to preparing for the HUD monitoring visit in spring 2023.
Administrative Updates
In 2018, the City Council approved CDBG funds to be used to demolish structures at Admiral’s Cove for the benefit of future affordable housing. Acceptable uses of CDBG funds for demolition are: 1) to benefit low income persons or 2) to eliminate slum and blight. When the former is used, the activity must remain open until the replacement property has been built and residents have moved in. Consequently, there are two activities that have been open in the HUD reporting system since 2018, which is a flag for HUD and increases the City’s perceived risk by HUD. By contrast, if coded to address slum/blight, then the activity may be closed once the demolition has been completed, which it has been. At this time, staff seeks City Council approval to make an administrative update to change the national objective from benefitting low income persons to eliminating slum and blight so that the open activity may be closed in HUD’s system. All other aspects of the activity would remain unchanged.
ALTERNATIVES
In connection with the holding of this public hearing to consider adoption of the CDBG/HOME FY 2023-24 Action Plan, City Council will receive public input and may:
• Authorize the City Manager to adopt the CDBG/HOME FY 2023-24 Action Plan and also use PLHA Funds; and authorize the 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 2023-24 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 2023-24 CDBG/HOME Action Plan. The funds described in this report have been budgeted in the CDBG Fund (203), HOME Fund (201) and Grants Fund (222).
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. The City has satisfied all such NEPA requirements applicable to the actions recommended herein. Additionally, these actions does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis 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 Fiscal Year 2023-24 Action Plan; authorize the City Manager to use Permanent Local Housing Allocation funds; and authorize the 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 Manager
Amanda Olson, Community Development Program Manager
Financial Impact section reviewed,
Margaret O'Brien, Finance Director
Exhibits:
1. Draft Action Plan
2. Draft Summary of Activities
cc: Social Service Human Relations Board