HomeMy WebLinkAboutStaff Report 185-08
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TO: HONORABLE CITY COUNCIL
ATTENTION: FINANCE COMMITTEE
FROM: CITY MANAGER DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
DATE: APRIL 1, 2008 CMR: 185:08
SUBJECT: PROPOSED FISCAL YEAR 2008-2009 COMMUNITY
DEVELOPMENT BLOCK GRANT (CDBG) FUNDING
ALLOCATIONS AND 2008-2009 DRAFT ACTION PLAN
RECOMMENDATIONS
Staff and the CDBG Citizens Advisory Committee (CAC) recommend that the Finance
Committee recommend that the City Council:
1. Allocate CDBG funding as recommended by staff and the Citizens Advisory
Committee (CAC) in the draft 2008/09 Action Plan.
2. Authorize staff to submit the 2008/09 Action Plan to Department of Housing and
Urban Development (HUD) by the May 15, 2008 deadline.
3. Authorize the City Manager, on behalf of the City, to execute the 2008/09 application
and Action Plan for CDBG funds and any other necessary documents concerning the
application, and to otherwise bind the City with respect to the application and
commitment of funds.
BACKGROUND
Consolidated Plan
The 2005-2010 Consolidated Plan, adopted by Council on May 9, 2005 and amended on
May 7, 2007, is a 5-year strategic plan of action that addresses priority housing and
community development needs. It also sets specific goals for attaining identified
objectives. Each year, an Annual Action Plan is prepared to identify specific projects to
be funded to implement the Consolidated Plan. The Consolidated Plan and the Annual
Action Plan updates are required by HUD in order for the City to receive federal funding
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from programs such as the Community Development Block Grant (CDBG) or HOME
Investment Partnership Act. The goal for the 2005-2010 five-year period is to provide
125 units of permanent, affordable housing. Palo Alto’s CDBG program continues to be
directed toward: expanding and maintaining the affordable housing supply; promoting
housing opportunities and choices; maintaining and improving community facilities; and
providing supportive services for targeted low-income groups, including persons who are
homeless, persons with disabilities, the elderly, and other special needs groups. All of the
proposed projects for CDBG funding for fiscal year 2008/09 address the priority housing
and supportive service needs identified in the adopted Consolidated Plan.
CDBG Regulations
The City of Palo Alto receives funds annually from HUD as an entitlement city under the
CDBG Program, authorized by Title I of the Housing and Community Development Act
of 1974 (the Act) as amended. The primary objective of the Act is “the development of
viable urban communities by providing decent housing and a suitable living environment,
and expanding economic opportunities, principally for persons of low and moderate
income.”
HUD regulations require that all activities must meet one of the three national objectives
of the CDBG Program:
¾ Benefit low- and very-low-income persons;
¾ Aid in the prevention or elimination of slums or blight; or
¾ Meet other community development needs having a particular urgency, or posing
a serious and immediate threat to the health or welfare of the community.
Palo Alto has historically expended all of its CDBG funds on projects benefiting low- and
very-low-income persons.
The City has three primary CDBG program activity areas:
1) Public Services: Social service activities that benefit low-income persons. The
maximum amount that can be expended under this category is 15 percent of the
grant allocation and 15 percent of the program income for the previous year. For
fiscal year 2008/09, the maximum available for public services is $127,672.
2) Planning and Administration: This category is used to reimburse for fair housing
activities, CDBG program management, oversight and coordination,
environmental reviews, and CDBG-related planning activities. Federal
regulations limit the amount that can be spent in this category to 20 percent of the
grant and 20 percent of the estimated program income for the following year. For
fiscal year 2008/09, funding is limited to a maximum of $148,229. The City’s
reimbursement for the cost of administering the CDBG program is limited by this
cap. Although the actual cost of administering the program is higher than the
recommended funding allocation, this recommendation is the maximum
reimbursement allowed given this year’s grant allocation. The balance of CDBG
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administrative costs, approximately $20,000, is charged to the City’s General
Fund.
3) Capital Projects: Capital improvement activities such as housing land acquisition,
purchase of existing rental housing, rehabilitation, accessibility, and public
improvements are the primary focus of the City’s CDBG program. There are no
funding limitations in this category.
CDBG Applications
Applications for the 2007/09 two-year funding period were mailed to area housing and
human service providers on October 5, 2006 and posted to the City’s website. A notice
announcing the availability of applications for 2007/08 and 2008/09 CDBG funding was
published in the Palo Alto Weekly on October 6, 2006. A proposal-writing workshop
was conducted on October 30, 2006 to assist applicants with program regulations and
project eligibility questions. The completed applications were due December 8, 2006.
Citizen Participation
The City follows a Citizen Participation Plan to encourage public participation in the
CDBG allocation and assessment process. The Citizen Participation Plan calls for a
seven-member Citizens Advisory Committee (CAC), six of whom are selected by the
Mayor. One slot on the CAC is reserved for a member of the City’s Human Relations
Commission (HRC). Members of this year’s CAC were: Donald Mendoza (HRC
Liaison), Carol Anderson, Susie Brain, Jeff Chen, Terry Godfrey, Michael Jakoby, and
Richard Schoelerman. Richard Schoelerman was selected by the Committee as
spokesperson. The funding recommendations previously made by the Committee and
approved by Council in May 2007 were preliminary recommendations for the second
year of the two-year cycle; therefore the CAC met on three occasions in January and
February 2008 to review and finalize those funding recommendations. A new housing
application received from the Palo Alto Housing Corporation was also discussed at these
meetings.
DISCUSSION
2008/09 Funds Available for Allocation
The total amount available for allocation in fiscal year 2008/09 is $1,813,106. The City’s
2008/09 CDBG grant is $676,148, a decrease of approximately five percent over the prior
year’s grant of $712,032. There are $440,341 in funds remaining from previous projects
that are being reallocated to new projects. This amount includes $383,929 that had been
allocated to Bridge Housing in fiscal year 2007/08 for their Fabian Way Senior Housing
project. The CDBG funds were to be used for land acquisition because that is one of the
few CDBG-eligible expenses in new housing development. Bridge needed to close
escrow on the property in July 2007, which was prior to the completion of the National
Environment Policy Act (NEPA) environmental review. CDBG regulations require that
an environmental review be completed prior to the expenditure of CDBG funds. Bridge
Housing will instead receive $600,000 from the City residential fund in fiscal year
2008/09. The City residential fund money can be used for other purposes on the project
and is not limited to acquisition expenses. Also included is $65,000 in program income
(income generated directly from the use of CDBG funds) expected to be received in
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2008/09, plus $17,365 in program income received in previous years in excess of the
estimated amount. The City received a loan repayment of $114,252 from Adolescent
Counseling Services for the sale of its Caravan House property, which is included in the
total available for allocation. The City will also be receiving approximately $500,000 in
loan repayments from the Sheridan Apartments ($165,000) and Palo Alto Gardens
($335,000). The estimated loan repayment amount is also included in the total funds
available for allocation.
In summary:
$676,148 FY 2008/09 CDBG entitlement grant from HUD
$440,341 Reallocation of other previous funds
$5,000 Estimated program income for 2008/09 from the City’s Housing
Improvement Program (HIP), a single-family residential
rehabilitation program that is no longer operational
$60,000 Estimated program income for 2008/09 from the Palo Alto
Housing Corporation that is generated when rental income exceeds
expenses on specific properties acquired or rehabilitated with
CDBG funds
$17,365 Actual program income received in previous years in excess of the
estimated amounts that were allocated
$114,252 Caravan House Loan Repayment
$165,000 Estimated Sheridan Apartments and loan repayment
$335,000 Estimated Palo Alto Gardens loan repayment
$1,813,106 TOTAL AVAILABLE FOR ALLOCATION
The City received 17 applications for funding from outside organizations totaling
$1,397,329 for FY 2008/09. The City is also in the process of soliciting applications for
a fair housing provider through a joint Request for Proposals (RFP) with the cities of
Mountain View, Sunnyvale and Gilroy. Because the provider has not been selected yet,
staff and the CAC are recommending a specific dollar amount to be allocated to the
selected provider.
In addition, the City received an application from the Palo Alto Housing Corporation in
February 2008 for the acquisition of land for the development of affordable housing. The
requested amount for this project is $3,000,000. In accordance with the City Affordable
Housing Fund Guidelines, funding applications for housing projects may be submitted at
any time throughout the year. The total requested amount in FY 08/09 CDBG funding is
$4,397,329.
FY 08/09 - Funding Recommendations
The chart on the following page shows the applications that were received accompanied
by the CAC and staff funding recommendations. For public service requests, the staff
and CAC recommended allocation of at least a portion of the requested funding for all the
applicants except for Mid-Peninsula Alano Club, Catholic Charities – Housing Search
Services and the Day Worker Center of Mountain View. Funding was not recommended
for the Alano Club because staff and the CAC had concerns regarding the organization’s
financial and administrative expertise. Staff and the CAC did not recommend funds for
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the Day Worker Center because these services do not benefit a significant number of low
income workers in Palo Alto. Staff and the CAC determined that funding for the
Housing Search Services is currently provided by other agencies in Palo Alto.
Attachment A is a narrative explaining the funding requests and funding
recommendations in more detail. It should be noted that changes in the allocations might
be necessary in the event that the City’s entitlement grant is increased or decreased when
the President signs the actual federal budget for the 2008/09 fiscal year.
The following capital projects were considered for the 2008/09 fiscal year:
• ESO’s Housing and Energy Services Program
• Eden Housing/Community Housing Alliance’s 875 Alma Street Senior Housing
Program,
• Lytton Gardens’ new shower enclosure project
• Stevenson House’s interior common area renovation project, and
• Palo Alto Housing Corporation’s 488 West Charleston Road Housing Project.
Staff and CAC recommended funding only the Palo Alto Housing Corporation (PAHC)
project for the 2008-2009 fiscal year in an amount totaling $1,538,577 because the
creation of new affordable housing is the top priority in the City’s 2005-2010
Consolidated Plan. The project will also be able to draw down all of the CDBG funds
awarded by the next March 2009, which will ensure that the City meets HUD’s standards
for the timely expenditure of CDBG funds. Staff and the CAC are also recommending
that program income from the Sheridan Apartments and Palo Alto Gardens loan
payments be allocated to the PAHC project. The estimated program income that will be
received is approximately $500,000. The Eden Housing/Community Housing Alliance
project is still very preliminary; Eden will be encouraged to seek funding for construction
subsidies from City housing funds, once it is closer to secure its planning entitlements.
Since staff is still working with Lytton Gardens and Stevenson House to complete other
CDBG funded projects from previous fiscal years, the recommendation is to encourage
Lytton and Stevenson House to submit an application during the next funding cycle.
Staff and the CAC do not recommend funding for ESO because the agency has declared
bankruptcy and is no longer in operation.
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FUNDING RECOMMENDATIONS FOR FISCAL YEAR 2008-2009
FUNDING RECOMMENDATIONS1
APPLICANT AGENCY
2007/2008
FUNDING
2008/2009
FUNDING
REQUEST
CAC/ STAFF
RECOMMEN-
DATIONS
PUBLIC SERVICES
1. Catholic Charities
Housing Search Services
-0- 20,000
-0-
2. Catholic Charities
Long-Term Care Ombudsman
7,500 7,800 7,800
3. Dayworker Center of Mountain View
Dayworker Center
-0- 15,000 -0-
4. Emergency Housing Consortium
Off the Streets Program
7,500 15,000 7,500
5. Emergency Housing Consortium
Palo Alto HOMES
7,500 10,000 7,500
6. InnVision/Clara-Mateo Alliance
Adult Singles/Couples Housing Program
17,500 35,000 17,500
7. InnVision/Clara-Mateo Alliance
Family Housing Program
17,500 25,000 17,500
8. InnVision/Urban Ministry
Opportunity Center/Urban Ministry
Program
30,000 30,000 30,000
9. Mid-Peninsula Alano Club
MPAC Operations
-0- 10,000 -0-
10. Palo Alto Housing Corporation
SRO Resident Support Services
25,000 42,245 30,000
11. Peninsula Association for Retarded
Children & Adults (PARCA)
Page Mill Court
-0- 10,000 Application
Withdrawn
12. Shelter Network – Haven Family House
Homeless Palo Alto Families & Single
Adults
8,500 30,000 8,500
Total Public Services (Cap $127,672) 121,000 250,045 126,300
FAIR HOUSING/ADMINISTRATION
13. Fair Housing Services
(Provider to be determined through RFP)
26,800 26,800 26,800
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FUNDING RECOMMENDATIONS1
APPLICANT AGENCY
2007/2008
FUNDING
2008/2009
FUNDING
REQUEST
CAC/ STAFF
RECOMMEN-
DATIONS
14. City of Palo Alto
Program Administration
124,536 186,900 121,429
Total Administration (Cap $148,229) 151,336 213,700 148,229
CAPITAL PROJECTS
15. Economic and Social Opportunities
Housing and Energy Services Program
-0- 60,000 -0-
16. Eden Housing/Community Housing
Alliance
875 Alma Senior Housing
-0- 500,000 -0-
17. Lytton Gardens
New Shower Enclosures
-0- 103,300 -0-
18. Palo Alto Housing Corporation
488 W. Charleston Road Housing Project
0 3,000,000 1,538,5772
19. Stevenson House
Interior Common Area Renovation
144,259 270,284 -0-
Total Capital (Cap $1,538,5773) 1,538,577
TOTAL
1,813,106
1Changes may be necessary if the amount of funding is increased or decreased when the President signs the
budget.
2The recommendation includes $1,372 in unallocated funds from the public service cap and $500,000 in
projected program income from Palo Alto Gardens and Sheridan Apartments. It may be necessary to modify the
amount of funding depending on the actual amount received from Palo Alto Gardens and Sheridan Apartments.
3The total capital cap includes $1,372 in unallocated funds from the public service cap and $500,000 in projected
program income from Palo Alto Gardens and Sheridan Apartments.
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Commitment of Funds
HUD regulations require that CDBG funds be expended in a timely manner. The regulatory
requirement is that no more than 1.5 times a jurisdiction’s annual entitlement grant amount may
remain in the letter of credit 60 days prior to the end of the program year. In an effort to reduce
the backlog of unspent CDBG funds, HUD employs monetary sanctions against jurisdictions
that exceed the regulatory standard. For this reason, all funding applications were scrutinized
to insure the readiness of the program or project to move forward and expend funds in a timely
manner.
TIMELINE
Funding recommendations made by the Finance Committee will be forwarded to the City
Council for review and approval at a public hearing scheduled for May 5, 2008. Subsequently,
the Annual Action Plan and Consolidated Plan update will be submitted to HUD to meet the
May 15, 2008 deadline, pending Council approval.
POLICY IMPLICATIONS
All of the applications recommended for funding in fiscal year 2008/09 are consistent with the
priorities established in the City’s adopted Consolidated Plan for the period 2005 to 2010. They
are also consistent with the housing programs and policies in the adopted Comprehensive Plan.
ENVIRONMENTAL REVIEW
For purposes of the National Environmental Policy Act (NEPA) and the California
Environmental Quality Act (CEQA), budgeting in itself is not a project. HUD environmental
regulations for the CDBG program are contained in 24 CFR 58 “Environmental Review
Procedures for Title I Community Development Block Grant Programs.” The regulations
require that entitlement jurisdictions assume the responsibility for environmental review and
decision-making under NEPA. Prior to the commitment or release of funds for each of the
proposed projects, staff will carry out the required environmental reviews or assessments and
certify that the review procedures under CEQA, HUD and NEPA regulations have been
satisfied for each particular project.
ATTACHMENTS
Attachment A: Staff and CAC recommendations for FY 2008/09 CDBG Funding
Attachment B: 2008/09 Draft Annual Action Plan
PREPARED BY: _______________________________
Eloiza Murillo-Garcia, Planner - CDBG
DEPARTMENT HEAD: _________________________________
STEVE EMSLIE, Director
Planning and Community Environment
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CITY MANAGER APPROVAL: ____________________________
EMILY HARRISON
Assistant City Manager
cc: CDBG Citizens Advisory Committee Members
2008/09 CDBG Applicant Agencies