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HomeMy WebLinkAboutItem 8.1 - 3186 CDBG Program Review (2) Page 1 of 6 STAFF REPORT CITY COUNCIL DATE: April 21, 2020 TO: Honorable Mayor and City Councilmembers FROM: Linda Smith, City Manager SUBJECT: Community Development Block Grant (CDBG) Program Review Prepared by: Jim Bergdoll, Senior Planner EXECUTIVE SUMMARY: The City Council will consider its options to become an Entitlement City and receive funding directly from the U.S. Department of Housing and Urban Development (HUD) starting in 2021. The City currently receives CDBG funding through the Urb an County program administered by Alameda County. The City must notify HUD and the County of its decision by May 15, 2020 and begin to implement that decision. STAFF RECOMMENDATION: Direct Staff to either remain in the Urban County program or seek Entitl ement City status and notify HUD and Alameda County HCD of that decision. FINANCIAL IMPACT: If the City remains part of the Urban County program, there would not be a change in financial impact. Becoming an Entitlement City would cost approximately $30,000 in consultant time to plan the program in FY 2020-21 and would also include a provision of staff time. Program administration costs, including staffing, would begin in FY 2021-22 and the cost could be partially offset by the CDBG program which allows 20 percent of the annual funding allocation to pay for program administration. DESCRIPTION: Background The Community Development Block Grant (CDBG) program provides annual grants to states, cities, and counties to develop viable urban communities by provid ing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low- and moderate-income persons. The program is authorized under Title 1 of the Housing and Community Development Act of 1974 and is administere d by HUD. CDBG funds are allocated to local jurisdictions by HUD using a calculation based on relative levels of pre-1940 housing, poverty, overcrowding, population, and regional Page 2 of 6 growth lag. The City currently receives CDBG funds through the Urban County program administered by the Alameda County Department of Housing and Community Development (HCD). The Urban County program is a way for cities with a population of less than 50,000 to receive CDBG funds (cities over 50,000 may also choose to receive their CDBG allocation through the Urban County program). Dublin participates in the Urban County program through a Cooperative Agreement with the unincorporated Alameda County and the cities of Newark, Emeryville, Albany, and Piedmont. Dublin’s participation provides approximately $244,000 in CDBG funds to the Urban County program. A portion of those funds are allocated specifically for Public Service Grants to fund programs in Dublin, a portion is allocated to countywide service programs, and a portion is placed into a pool of funds for Capital Grants that are available to the Urban County jurisdictions on a competitive basis to fund capital improvements. Alameda County handles most of the required program administration, including preparation of the Consolidated Plan, Annual Action Plan, and Citizen Participation Plan. The Consolidated Plan must be prepared every five years, and include a needs assessment, market analysis, anti-poverty strategy, goals, and projections. The Annual Action Plan is prepared by the County prior to the start of each fiscal year and identifies the goals, projections, and budget for the year. HUD also requires extensive reporting and program monitoring which is handled by the County. This includes year end and quarterly reporting of data on people served, demographics, etc., administration of financial disbursements to grantees, periodic monitoring of every grantee, and financial reporting on expenditures and balances. Alameda County HCD administers certain CDBG-funded programs that benefit all the Urban County jurisdictions. This includes administering a contract with ECHO Housing to provide tenant/landlord and fair housing services. The County also funds the Minor Home Repair Program administered by Healthy Homes, and a Rental Housing Rehabilitation program that is available to Urban County jurisdictions. Dublin’s share of discretionary CDBG funds are distributed through Public Service Grants and Capital Grants. Public Service Grants are awarded through the City’s Human Services Grants Program to local non-profit organizations serving Dublin in conformance with program guidelines. These grants are awarded annually by the Dublin City Council after reviewing recommendations made by the Dublin Human Services Commission. Public Service Grants are limited to 15 percent of the total annual CDBG funding allocation. Historically, Dublin has received more than its share of the 15 percent Public Service Grant allocation by utilizing funds that have gone unused by the other Urban County jurisdictions. This year, Dublin will award approximately $85,000 in public services grants. The Capital Grant program is administered by Alameda County to provide funding for capital improvements. Organizations apply to the County with the City taking the lead on Page 3 of 6 the application submittal. Approximately $630,000 is available annually to share amongst the Urban County jurisdictions. This includes a $330,000+/- “capital pool” which is available for projects through an RFP program, and at least $300,000 in previously programmed categories like Rental Housing Rehabilitation and Preservation, and Minor Home Repair. It should be noted that the funds in the “capital pool” are shared amongst the Urban County jurisdictions and awarded to projects on a competitive basis. The amount of money available to projects in Dublin can vary from year to year. Open Heart Kitchen successfully applied for a $330,000 Capital Grant this fiscal year to build out their new facility in Livermore which will serve the greater Tri - Valley. Current Consideration Every three years, the City has the option to stay in the Urban County program or become an Entitlement City. The City first became eligible to participate as an Entitlement City in 2014 when the population reached 50,000. The City Council decided in 2014 and again in 2017, to remain in the Urban County program. The City must once again decide whether to remain in the Urban County program and enter into a new three-year Cooperative Agreement or become an Entitlement City and begin the process to establish that program. The City must inform HUD and Alameda County HCD of its decision by May 15, 2020. ANALYSIS: The City of Dublin has the option to become an Entitlement City and receive CDBG funds directly from HUD and take over program administration beginning in 2021 or remain part of the Urban County program. Table 1 below provides a comparison of the CDBG components for Dublin under the current Urban County program and as an Entitlement City. All dollar amounts are provided on an a nnual basis with Urban County program figures based on the current fiscal year, and Entitlement City figures estimated based on information provided by HUD. Table 1. Urban County & Entitlement City Program Matrix Program Component Urban County Program (FY 2019/20) Entitlement City (Estimated) CDBG Annual Allocation (Allocated to programs noted below) $244,000 (estimated portion of Urban County funds attributable to Dublin’s participation in the program. These funds are not the exclusive use of Dublin nor are they a cap on annual funding available to Dublin based programs and services) $250,000 +/- (estimated total amount that would be available to Dublin in year 1 of the program) Public Service Grants (To non-profit service providers and limited to 15% max. of annual allocation) $36,600 (Note: Can utilize unused Urban County funds to increase this amount. For example, Dublin awarded $85,000 in FY 2019/20 by accessing unused funds from other Urban County jurisdictions. $37,500 (estimated total amount based on the above number) Capital Grants (To non- profit organizations for capital improvements) Portion of $630,000 Urban County pool awarded by County (Recent examples include: Axis Health $16K loan $160,000 total to be allocated by Dublin through RFP (Unused funds can be carried over into future years Page 4 of 6 Program Component Urban County Program (FY 2019/20) Entitlement City (Estimated) payments annually, $30K capital improvements FY16 and $25K FY17; CRIL roof replacement $5K FY16) with certain limitations) Economic Development (Job creation for small, low income owned or operated businesses) Amount varies per year and determined by program administration and funded from the annual CDBG allocation based on program priorities Amount varies per year and determined by program administration and funded from the annual CDBG allocation based on program priorities Tenant-Based Rental Assistance (Emergency housing funds available partly from CDBG program, and partly HOME) Not available CDBG can be used for related support services outside of 15% services cap. HOME funds are used to provide financial assistance HOME Funds (rental assistance, down payment assistance, homebuyer counseling, affordable housing production) Share of $585,000 pool awarded on competitive basis to organizations serving Urban County jurisdictions $75,000 (program administered by City, but funds continue to be administered by HCD) HUD 108 Loans (For Capital Projects or Programs as 20- year, low interest loan) Available only in partnership with an Entitlement City (example: Axis Health) Up to 5x CDBG allocation (total cumulative balance of all outstanding 108 loans cannot exceed this amount) Program Administration (20% max. of annual allocation to cover program administration, and preparation of Consolidated Plan, Annual Action Plan, Citizen Participation Plan) $6,600 to Dublin; and $42,200 to Alameda County $50,000 to Dublin Consolidated Plan Prepared every 5 years by County with staff input (costs offset by Program Administration funds) Prepared every 5 years by the City (estimated cost: $30,000) Annual Action Plan and Citizen Participation Plan Prepared annually by County with staff input (costs offset by Program Administration funds) Prepared annually by City (costs offset by Program Administration funds) Monitoring and Reporting to HUD Prepared annually by the County Prepared annually by the City Comparable/Nearby Entitlement Cities Table 2 below provides the CDBG allocation for FY 2020 - 21 for comparable and nearby Entitlement Cities. Table 2. Comparable Entitlement City Annual Allocations City Population 1/1/2019 (DOF) CDBG Allocation FY 2020/21* Santee (San Diego County) 58,408 $276,000 San Clemente (Orange County) 65,405 $356,000 Walnut Creek (Contra Costa County) 70,212 $342,000 Pleasanton (Alameda County) 80,492 $342,000 Livermore (Alameda County) 91,039 $437,000 Dublin (Alameda County) 64,577 $250,000* *Entitlement City figures for Dublin estimated based on information provided by HUD. Page 5 of 6 The cities of San Ramon (population 72,073) and Brentwood (population 51,335) are examples of cities which are similar in size and demographics to Dublin that are not Entitlement Cities, and do not plan to change that status. As an example of how CDBG funds can be spent by category, Table 3 below shows how the cities of Livermore and Pleasanton proposed spending their a nnual CDBG allocations as Entitlement Cities in FY 2019-20. Table 3. Livermore and Pleasanton CDBG Allocation by Category FY 2019 -20 Program Component Livermore Pleasanton Capital Grants Homeowner Housing Rehabilitation $160,000 -- Tri-Valley REACH Home Maintenance & Repairs $12,000 Community Facilities Rehabilitation -- $183,000 Axis Clinic Loan Repayment -- $23,000 Public Service Grants Misc. Community Services $72,000 $48,000 Other Tenant-based Based Rental Assistance/ Emergency Rehousing $108,000 -- Administration $88,000 $64,000 Total $440,000 $318,000 Urban County Program Historically, Dublin’s CDBG program efforts have primarily focused on Public Service Grants. If Dublin were to remain in the Urban County program, there appear to be opportunities for the City to expand its CDBG program to further utilize available funding, particularly in the Capital Grant and Economic Development categories. These efforts would require coordination with Alameda County HCD and allocation of additional staff resources to the CDBG program. These funds would be drawn from the Urban County pool of funds ($630,000+/-) for Capital Grants. Potential uses of Capital funds include: • Single-Family Home Rehabilitation or Weatherization Grants. • Incentivize the creation of Junior Accessory Dwelling Units. • Community Facility Rehabilitation and Preservation - Expand facilities such as Tri-Valley Haven. • Assist non-profit organizations to acquire, rehabilitate and/or preserve apartments for low-income households. • Land Acquisition for New Affordable Housing. • Public Works projects that improve ADA accessibility. Page 6 of 6 The City could also potentially utilize CDBG Economic Development funds for job creation/retention activities including establishment, stabilization and expansion of small businesses if they are either owned by low income people or employ low income workers. If the City Council elects to remain in the Urban County program, but desires to expand the programs funded through CDBG, they cou ld direct Staff to pursue such opportunities. Entitlement City Becoming an Entitlement City would provide the City with greater control over the CDBG program administration and certainty regarding annual Capital Grant funding. But it could also reduce the maximum amount of potential Capital Grant and Public Service Grant funding available each year because we could no longer utilize unused funds in the Urban County pool (Please refer to the discussion immediately above for examples of potential programs that could use capital funds). With that control would also come additional work to administer the program. In addition to the upfront consultant time and cost to plan the program, Staff believes additional staff time would be necessary to manage the CDBG start up and ongoing program. This would either come in the form of a redeployed staff resource or a staff augmentation through a consultant. ENVIRONMENTAL REVIEW: This information report is not subject to the requirements of the California Environment al Quality Act (CEQA), pursuant to CEQA Guidelines Section 15378 as it does not meet CEQA’s definition of a project and will not result in direct or indirect physical changes in the environment. STRATEGIC PLAN INITIATIVE: None. NOTICING REQUIREMENTS/PUBLIC OUTREACH: None. ATTACHMENTS: None.