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Home My WebLink About2019-04-02 Finance Committee Agenda PacketFinance Committee 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Tuesday, April 2, 2019 Special Meeting Community Meeting Room 5:30 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 12 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items. If you wish to address the Committee on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers/Community Meeting Room, and deliver it to the Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Committee, but it is very helpful. Public comment may be addressed to the full Finance Committee via email at City.Council@cityofpaloalto.org. Call to Order Oral Communications Members of the public may speak to any item NOT on the agenda. Action Items 1. Recommendations on Proposed Fiscal Year 2019-20 Community Development Block Grant (CDBG) Funding Allocations and the Draft Fiscal Year 2019-20 Annual Action Plan 2. Preliminary Rate Changes for the Electric and Gas Utilities for Fiscal Year 2020 3. Discussion With the Finance Committee on Fiscal Year (FY) 2020 Budget Materials Future Meetings and Agendas Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 2 April 2, 2019 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Finance Committee Items Tentatively Scheduled April 16 5:30pm 1 Adoption of a Resolution Amending Utility Rate Schedule D-1 (Storm and Surface Water Drainage) Increasing the Storm Water Management Fee by 4.5 Percent to $14.68 Per Month Per Equivalent Residential Unit for Fiscal Year 2020 - Public Works 2 FY2020 Water Financial Plan and Rate Proposals - Utilities 3 FY2020 Wastewater Collection Financial Plan and Rate Proposals - Utilities May 15 & 23 1pm - 8pm 4 FY 2020 Electric Financial Plan and Rate Proposals - Utilities 5 FY 2020 Gas Financial Plan and Rate Proposals - Utilities 6 FY 2020 PROPOSED Operating/Capital Budgets - ASD 7 FY 2020 Municipal Fee Hearings - ASD 8 Review recommended workplan for in-depth Municipal Fee review, follow-up from 2018 ASD May 28 1pm - 5pm 9 FY 2020 Budget Wrap-up - ASD June 4, 2019 10 3rd Quarter Financials - ASD City of Palo Alto (ID # 10141) Finance Committee Staff Report Report Type: Action Items Meeting Date: 4/2/2019 City of Palo Alto Page 1 Summary Title: CDBG Allocations - Fiscal Year 2019-20 Title: Recommendations on Proposed Fiscal Year 2019-20 Community Development Block Grant (CDBG) Funding Allocations and the Draft Fiscal Year 2019-20 Annual Action Plan From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the Finance Committee recommend that the City Council take the following actions: 1. Allocate CDBG funding as recommended in the draft 2019-20 Action Plan (Attachment B) and as described in this report, including the contingency plan policies recommended by the Human Relations Commission (HRC); 2. Authorize the City Manager to execute the Fiscal Year 2019-2020 CDBG application and 2019-20 Action Plan for CDBG funds, any other necessary documents concerning the application, and to otherwise bind the City with respect to the applications and commitment of funds; 3. Authorize staff to submit the 2019-20 Action Plan to HUD by the May 15, 2019 deadline. Executive Summary The City of Palo Alto receives funds annually from the U.S. Department of Housing and Urban Development (HUD) as an entitlement city under the Community Development Block Grant (CDBG) Program. It is the principal Federal program providing localities with grants to devise innovative neighborhood approaches to assisting persons of low and moderate income. CDBG federal appropriations for Fiscal Year (FY) 2019-2020 have not yet been determined. For budgeting purposes, City staff has estimated the City’s HUD Entitlement Grant for Fiscal Year 2019-20 at $436,335, based on a 10% reduction in funds from FY 2018-19. Adding estimated reappropriated funds from prior years and estimated program income results in an estimated budget of $661,045. City of Palo Alto Page 2 HUD requirements include preparation of a five-year strategic plan of action, referred to as a Consolidated Plan, to address priority housing and community development needs and to set goals for attaining identified objectives. An Action Plan is prepared annually to identify specific projects to be funded in that year that implement the strategies identified in the Consolidated Plan. Currently the CDBG program is guided by the 2015-2020 Consolidated Plan adopted by Council May 4, 2015. The draft 2019-20 Action Plan (Attachment B) will be made available for Public review from March 15, 2019 through April 15, 2019. The Finance Committee is being asked to review the draft 2019-20 Action Plan and funding recommendations and recommend approval to the City Council. The City Council will review the recommendations of the Finance Committee at a public hearing scheduled for May 6, 2019. Staff will then submit the Action Plan to HUD in order to meet the May 15, 2019 deadline. Background The CDBG program is authorized under Title I of the Housing and Community Development Act of 1974, as amended. As an entitlement city under the CDBG program, the City of Palo Alto receives funds annually on a formula grant basis. Palo Alto has historically expended all of its CDBG funds on projects benefiting low- and very-low-income persons. HUD regulations require all CDBG funded activities meet one of the three national objectives: • Benefit low-and very-low-income persons; • Aid in the prevention or elimination of slums or blight; or • Meet other community development needs having a particular urgency, or posing a serious and immediate threat to the health or welfare of the community. All of the funded projects in Palo Alto meet the first objective of benefiting low-and very-low- income persons. Palo Alto has five primary CDBG program activity areas in which to allocate funds: public services, planning and administration, economic development, housing, and public facilities. Federal regulations limit the amount that can be spent on planning and administration and public services. The allocation for planning and administration is proposed to be at the maximum 20 percent spending cap in Fiscal Year 2019-2020; approximately $114,476. Similarly, Federal law places a maximum spending cap of 15 percent of the grant allocation and 15 percent of any program income received during the previous fiscal year on public services. It is estimated that $80,874 will be available for public service activities for FY 2019-2020. Public service activities include services for homeless persons, housing and emergency services to low income individuals with disabilities, and services to victims of domestic violence. Consolidated Plan Per HUD requirements, the City is required to prepare a Consolidated Plan every five years. The 2015-2020 Consolidated Plan addresses priority housing and community development needs. It City of Palo Alto Page 3 also sets specific goals for attaining identified objectives. The 2015-2020 plan outlines the following six specific goals • Affordable Housing: Assist in the creation and preservation of affordable housing for low income and special needs households. • Homelessness: Support activities to end homelessness. • Community Services: Support activities that provide community services to low income and special needs households. • Strengthen Neighborhoods: Support activities that strengthen neighborhoods. • Fair Housing: Promote fair housing choice. • Economic Development: Expand economic opportunities for low income households The Consolidated Plan is available on the City website: https://www.cityofpaloalto.org/civicax/filebank/documents/49948. Action Plan Each year, an Annual Action Plan is prepared to identify specific projects to be funded to implement the Consolidated Plan. HUD requires submittal of an Annual Action Plan no later than 45 days prior to the start of the program year, or May 15th of every year. CDBG Applications Currently, the CDBG program operates under a two-year funding request cycle. Applications for Fiscal Years 2019-2020 and 2020-2021 were made available in November 2018. A notice of CDBG funding availability was published in the Daily Post on November 16, 2018 with completed applications due January 10, 2019. Mandatory pre-proposal conferences were conducted on November 28, 2018 and December 5, 2018 to assist applicants with program regulations and project eligibility questions. Because the City did not receive sufficient funding applications for the housing and public facilities rehabilitation categories, the City reopened the Notice of Funding Availability for multi-family housing and public facilities rehabilitation projects in January 2019. A notice of CDBG funding availability was published in the Daily Post on January 30, 2019 with completed applications due February 11, 2019. The CDBG applications considered for funding for Fiscal Year 2019-2020 are identified on the attached chart (Attachment A). Citizen Participation A Citizen Participation Plan is a required component of the CDBG Program. HUD regulations require CDBG recipient agencies to prepare and implement a plan that provides adequate opportunity for citizens to participate in an advisory role in the planning, implementation, and assessment of the CDBG program. In 2010 the City Council designated the Human Relations City of Palo Alto Page 4 Commission (HRC) to be the lead community participation group of the CDBG process. A sub- committee of the HRC Selection Committee, comprised of staff and three members of the HRC reviews the CDBG funding applications and makes recommendations to the full commission. The CDBG Selection Committee met on February 25, 2019 at the Community Meeting Room, City Hall to discuss the Fiscal Year 2019-2020 CDBG budget and recommended funding amounts based on the estimated funds available. In addition, the Selection Committee made a recommendation for a contingency plan for when the actual CDBG allocation is known. The contingency plan is further described in the Discussion Section of the report. The Selection Committee’s recommendations were presented to the HRC on March 14th, 2019 and were approved unanimously and are reflected in Table 1 below Commitment of Funds HUD regulations require that CDBG funds be expended in a timely manner. Specifically, the regulatory requirement is that no more than 1.5 times a jurisdiction’s annual entitlement grant amount remain in the City’s 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 this timeliness requirement. For this reason, all funding applications are scrutinized to ensure the readiness of the program or project to move forward and expend funds in a timely manner. Discussion All of the proposed projects for CDBG funding for Fiscal Year 2019-2020, as presented in the draft 2019-20 Action Plan, address the priority housing and community development needs identified in the draft Consolidated Plan. Fiscal Year 2019-2020 Funds Available for Allocation CDBG federal appropriations for Fiscal Year 2019-2020 have not yet been determined. For budgeting purposes, City staff has estimated the City’s HUD Entitlement Grant for Fiscal Year 2019-20 based on a 10% reduction in funds from Fiscal Year 2018-19. Based on the foregoing, the total amount available for allocation in Fiscal Year 2019-2020 is estimated to be $661,045 as summarized below: Estimated Fiscal Year 2019-2020 Entitlement Grant $436,335 Reallocated Funds from Previous Years: Catholic Charities (FY 2017-18) $42.03 YWCA (FY 2017-18) $942.34 Project Sentinel (FY 2017-18) $6825.12 Unprogrammed Excess Program Income (FY 2017-18) $80,851.61 $88,661 Estimated Program Income from Palo Alto Housing Corporation that is generated from loan repayments and rental income in excess of expenses on specific properties acquired or rehabilitated with CDBG funds $136,049 ESTIMATED TOTAL AVAILABLE FOR ALLOCATION $ 661,045 City of Palo Alto Page 5 Table 1: Total Amount Available for Allocation in Fiscal Year 2019-20 Of the $661,045 of CDBG funds anticipated to be available, the total amount is proposed to be used during Fiscal Year 2019-2020. The following summarizes the calculations for funding limitations that are placed on two funding categories: Estimated Fiscal Year 2019-2020 CDBG Entitlement Grant $436,335 Actual Fiscal Year 2017-2018 Program Income $102,828 Total $539,163 PUBLIC SERVICE CAP (15% OF $539,163) $ 80,874 Table 2: Maximum Available for Public Services Estimated Fiscal Year 2019-2020 CDBG Entitlement Grant $436,335 Estimated Fiscal Year 2019-2020 Program Income $136,049 Total $572,384 PLANNING AND ADMINISTRATION CAP (20% OF $572,384) $ 114,776 Table 3: Maximum Available for Planning and Administration The difference between the funding caps ($ 80,874 + $114,776) and the amount proposed to be allocated ($661,045) during Fiscal Year 2019-2020 yields the amount that can used to fund projects ($465,695) within the other three funding categories: economic development, housing, and public facilities. Fiscal Year 2019-2020 – Funding Requests and Recommendations Palo Alto’s CDBG program is operating under a two-year funding cycle. Funding for Fiscal Year 2019-2020 is contingent upon the CDBG allocation, program income, and any available funds for reallocation. Public Service and Administration Caps have been calculated in accordance with available funds. All of the agencies remain eligible and meet program goals and objectives. A list of the submitted applications and the funding recommendations for Fiscal Year 2019-20 is included in Attachment A. Table 4, Fiscal Year 2019-2020 Funding Recommendations, identifies the applications recommended for funding and the final allocation amounts recommended by the HRC. Applicant Agency Final Allocation FY2018-19 Funding Request FY2019-20 HRC Recommendations FY2019-20 Public Services City of Palo Alto Page 6 Table 4:Fiscal Year 2019-2020 Funding Recommendations Contingency Plan The amount of CDBG funding for Fiscal Year 2019-20 is still unknown, the HRC has made recommendations for a contingency plan in case of an increase in funding, as well as if there is a decrease in funding. It is recommended that the Finance Committee recommend Council approval of this contingency plan. In the case of funding increase, the following plan is recommended: • Public Services: Maintain recommended funding levels for Catholic Charities and YWCA. Prioritize funding for Silicon Valley Independent Living (SVILC) from the recommended Palo Alto Housing Corporation – SRO Hotels Supportive Services $30,933 $ 48,283 $ 29,937 Catholic Charities of Santa Clara County – Long Term Care Ombudsman $10,000 $ 10,000 $ 10,000 LifeMoves(formerly InnVision Shelter Network)-Opportunity Services Center $44,933 $ 46,575 $ 29,937 YWCA/Support Network – Domestic Violence Services $10,000 $ 10,000 $ 5,000 Silicon Valley Independent Living Center – Housing and Emergency Services $5,032 $ 28,826 $ 6,000 Sub-total $100,898 $143,684 $ 80,874 Admin/Fair Housing Services Project Sentinel – Fair Housing Services $33,698 $ 33,698 $31,587 City of Palo Alto - CDBG Administration $85,000 $ 85,000 $82,889 Sub-total $118,698 $118,698 $114,476 Economic Development Downtown Streets Inc. – Workforce Development Program $336,400 $336,400 $330,695 Sub-total $336,400 $336,400 $330,695 Housing/Public Facilities Rehabilitation MayView Community Health Center – Establishment of Dental Program & Renovation N/A $150,000 $135,000 Sub-total N/A $150,000 $135,000 Grand Total $670,434* $748,782 $661,045 *Note: Includes $114,438 allocation to Minor Home Repair Program for FY 2018-19 City of Palo Alto Page 7 $6,000 to $12,000. Once SVILC is at $12,000, distribute the additional available amount between Life Moves and Palo Alto Housing Corporation equally. • Planning and Administration: Distribute the additional available amount equally between Project Sentinel and City of Palo Alto for CDBG administration. • Economic Development & Public Facilities Rehabilitation: Three parts of the additional available funding will be provided to Downtown Streets Team and one part of the additional funding to May View Community Health. In the case of a decrease in funding, the following plan is recommended: • Public Services: In case of a further decrease, it is recommended not to fund YWCA. Distribute any funding decrease proportionately among the remaining four public service applicants, but maintain a minimum funding allocation of $5,000 for any applicant. • Planning and Administration, Economic Development & Public Facilities Rehabilitation: Distribute any funding decrease proportionately among the remaining three categories. 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 6, 2019. Subsequently, the adopted Action Plan will be submitted to HUD by May 15, 2019. Resource Impact Several measures have been taken to minimize any General Fund impact for the administration of the CDBG Program. This includes streamlining the program to reduce staffing needs and revised monitoring guidelines to improve efficiency of the program. Currently, CDBG funding covers the cost of 0.48 FTE hourly Staff Specialist and consultant costs for CDBG administration. Policy Implications All of the applications recommended for funding in Fiscal Year 2019-2020 are consistent with the priorities established in the City’s adopted 2015-2020 Consolidated Plan. Moreover, they are 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. Prior to 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. City of Palo Alto Page 8 Attachments: • Attachment A: FY 2019-20 CDBG Funding Recommendations • Attachment B: FY 2019-20 Draft Annual Action Plan CITY OF PALO ALTO CDBG APPLICATIONS (FISCAL YEAR 2019-20) AGENCY PROGRAM NAME FY 2018-19 FINAL ALLOCATIONS FY 2019-20 REQUEST HRC RECOMMENDATION Public Services (15% CAP = $80,874) Palo Alto Housing Corp. SRO Resident Support $30,933 $ 48,283 $ 29,937 Catholic Charities Ombudsman $10,000 $10,000 $10,000 LifeMoves (formerly Inn Vision) Opportunity Center $44,933 $ 46,575 $ 29,937 YWCA/Support Network Domestic Violence Services $10,000 $10,000 $5,000 Silicon Valley Independent Living Center Housing and Emergency Services $5,032 $ 28,826 $6,000 Public Service Total $100,898 $ 143,684 $80,874 Planning & Administration (20% CAP = $ 114,476) Project Sentinel Fair Housing Services $33,698 $33,698 $31,587 City of Palo Alto CDBG Administration $85,000 $85,000 $82,889 Planning & Administration Total $118,698 $118,698 $ 114,476 Economic Development Downtown Streets Workforce Development Program $ 336,400 $336,400 $330,695 Economic Development Total $ 336,400 $336,400 $330,695 Housing/Public Facilities Rehabilitation May View Community Health Establishment of Dental Program & Renovation N/A $150,000 $135,000 Rehab Total N/A $ 150,000 $135,000 GRAND TOTAL $670,434* $748,782 $ 661,045 *Includes $114,438 allocation to Minor Home Repair Program for FY 2018-19 Funds Available $ 661,045 Available for Public Service (15% Cap) $ 80,874 Available for Planning/Admin (20% Cap) $ 114,476 Available for Economic Development/Public Facilities $ 465,695 FISCAL YEAR 2020 DRAFT ONE-YEAR ACTION PLAN Annual Update of the City’s Consolidated Plan for the Period July 1, 2019 to June 30, 2020 Public Review & Comment Period: March 15, 2019 –April 15, 2019 Prepared by the Department of Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 Director Planning: Jonathan Lait Erum Maqbool, CDBG Staff Specialist T: (650) 329-2660 E: erum.maqbool@cityofpaloalto.org Annual Action Plan 2020 2 Executive Summary AP-05 Executive Summary - 24 CFR 91.200(c), 91.220(b) 1. Introduction The Department of Housing & Urban Development (HUD) requires that entitlement jurisdictions complete a Consolidated Plan every five years. Additionally, entitlement jurisdictions must submit an Annual Action Plan. The City’s 2015-2020 Consolidated Plan was approved by Council on May 4, 2015. The five-year goals from the City’s Consolidated Plan include: - Assist in the creation & preservation of affordable housing for low income & special needs households. - Support activities to end homelessness. - Support activities that strengthen neighborhoods through the provision of community services & public improvements to benefit low income & special needs households. - Promote fair housing choice. - Expand economic opportunities for low income households. The City of Palo Alto is an entitlement jurisdiction that receives federal funding from HUD through the Community Development Block Grant (CDBG) Program. The purpose of CDBG funding is to help jurisdictions address their community development needs. CDBG grantees are eligible to use the resources they receive for Public Services, Community and Economic Development, Capital Improvement Projects (CIP) Public Facilities/Infrastructure, and CIP Housing Rehabilitation. Public Service projects provide social services and/or other direct support to individuals and households in need of assistance. Community and Economic Development projects are focused on assisting businesses and organizations with small business loans, façade improvements, and other initiatives. CIP Public Facilities/Infrastructure projects are those which aim to improve public facilities and infrastructure. CIP Housing Rehabilitation projects are for housing rehabilitation improvements of single and multi-unit housing. A total of $661,045 is available for funding projects & programs during the 2019-20 Program Year. The City received $436,335 from the federal CDBG program, approximately $136,049 in program income and $88,661 in reallocated funds from previous fiscal years. Please see “Table 1, Fiscal Year 2020 CDBG Budget” below which summarizes the uses of the funds proposed during Fiscal Year 2019-20. Annual Action Plan 2020 3 2. Summarize the objectives and outcomes identified in the Plan The City is part of the San Francisco Metropolitan Bay Area, located 35 miles south of San Francisco and 14 miles north of San José. The City is located within the County of Santa Clara, borders San Mateo County, and encompasses an area of approximately 26 square miles, one-third of which consists of open space. According to Quickfacts data provided by the U.S. Census Bureau https://www.census.gov/quickfacts/fact/table/paloaltocitycalifornia/PST045216, the City's total resident population is 67,178. The City has the most educated residents in the Country and is one of the most expensive cities to live in. In Silicon Valley, the City is considered a central economic focal point and is home to over 7,000 businesses while providing employment to more than 98,000 people. See Attachment 1 for a summary of the Needs Assessment in the 2015-2020 Consolidated Plan. 3. Evaluation of past performance The City recognizes that the evaluation of past performance is critical to ensure the City and its sub recipients are implementing activities effectively and that those activities align with the City’s overall strategies and goals. The performance of programs and systems are evaluated to ensure the goals and projects are addressing critical needs in the community. Palo Alto has historically allocated CDBG funds to activities that benefit LMI persons, with a top priority to increase affordable housing opportunities in the City. However, due to Palo Alto’s expensive housing market coupled with a decrease in CDBG entitlement funds, it is becoming more difficult to create opportunities for affordable housing. As such, during this Consolidated Planning period the City will be focusing on rehabilitating existing affordable housing stock that is in need of repair. Planning Staff works closely with sub recipients to leverage resources and create opportunities for partnership and collaboration. The City’s sub recipients are challenged to think creatively about working together to address the needs in our community. 4. Summary of Citizen Participation Process and consultation process Palo Alto encourages citizen participation through the Action Plan process. This includes consulting local organizations, holding public meetings, and encouraging public comment during the public review period. A total of four public hearings were planned in order to allow for public input. The City actively reached out to all applicants and posted updates on the CDBG website. A 30-day comment period from March 15, 2019 through April 15, 2019 gave citizens an opportunity to offer comments on the draft Action Plan. The draft was posted on the City’s CDBG website and copies were made available to the public at the Planning and Community Environment Department at Palo Alto City Hall. 5. Summary of public comments Annual Action Plan 2020 4 6. Summary of comments or views not accepted and the reasons for not accepting them The City accepts and responds to all comments that are submitted. 7. Summary Table 1, Fiscal Year 2020 CDBG Budget, summarized the uses of the funds proposed during Fiscal Year 2019-20. Specific funding resources will be utilized based on the opportunities and constraints of each particular project or program. Applicant Agency Budget Public Services Palo Alto Housing Corporation - SRO Resident Supportive Services $29,937 Catholic Charities of Santa Clara County – Long Term Care Ombudsman $10,000 LifeMoves (Formerly InnVision) - Opportunity Center - Drop-In Center $29,937 YWCA/Support Network - Domestic Violence Services $5,000 Silicon Valley Independent Living Center – Housing and Emergency $6,000 Sub-total $80,874 Planning and Administration Project Sentinel – Fair Housing Services $31,587 City of Palo Alto Administration $82,889 Sub-total $114,476 Economic Development Downtown Streets – Workforce Development Program $330,695 Sub-total $330,695 Housing Minor Home Repair Program – City of Palo Alto $135,000 Sub-total $135,000 Grand Total $661,045 Table 1. Fiscal Year 2020 Budget Annual Action Plan 2020 5 Annual Action Plan 2020 6 PR-05 Lead & Responsible Agencies – 91.200(b) 1. Agency/entity responsible for preparing/administering the Consolidated Plan Describe the agency/entity responsible for preparing the Consolidated Plan and those responsible for administration of each grant program and funding source. Agency Role Name Department/Agency Lead Agency PALO ALTO CDBG Administrator PALO ALTO Planning and Community Environment Department HOPWA Administrator HOME Administrator HOPWA-C Administrator Table 2 – Responsible Agencies Narrative (optional) The City of Palo Alto (City) is the Lead Agency for the United States Department of Housing and Urban Development (HUD) entitlement programs. The City’s CDBG Staff Specialist is responsible for the administration of HUD entitlements, which include the Community Development Block Grant Program (CDBG). By federal law, each jurisdiction is required to submit to HUD a five-year Consolidated Plan and Annual Action Plans listing priorities and strategies for the use of federal funds. The Consolidated Plan is a guide for how the City will use its federal funds to meet the housing and community development needs of its populations. For the 2015-2020 Consolidated Plan process, the City worked collaboratively with the County of Santa Clara (County) and other entitlement jurisdictions in the County to identify and prioritize housing and housing-related needs across the region, and strategies to meet those needs. The fiscal year 2019/20 Annual Action Plan represents the fifth and the final year of CDBG funding of the 2015-2020 Consolidated Plan. Annual Action Plan 2020 7 Consolidated Plan Public Contact Information Erum Maqbool, CDBG Staff Specialist City of Palo Alto Department of Planning and Community Environment 250 Hamilton Avenue, 5th Floor Palo Alto, CA 94301 E-mail: erum.maqbool@cityofpaloalto.org Phone: (650) 329-2660 Annual Action Plan 2020 8 AP-10 Consultation – 91.100, 91.200(b), 91.215(l) 1. Introduction During Fiscal Year 2019-20, the City will continue to work with non-profit organizations to provide programs and services for low-income households; private industry, including financial and housing development groups, to encourage the development of affordable housing opportunities regionally and within the City; and other local jurisdictions, including the County of Santa Clara, in carrying out and monitoring regional projects in a coordinated and cost-effective manner. The City will provide technical assistance to the public service agencies it funds with CDBG dollars and will continue to attend the Regional CDBG/Housing Coordinators meetings. Provide a concise summary of the jurisdiction’s activities to enhance coordination between public and assisted housing providers and private and governmental health, mental health and service agencies (91.215(l)) Describe coordination with the Continuum of Care and efforts to address the needs of homeless persons (particularly chronically homeless individuals and families, families with children, veterans, and unaccompanied youth) and persons at risk of homelessness. The Santa Clara County Continuum of Care (CoC) is a multi-sector group of stakeholders dedicated to ending and preventing homelessness in the County. The CoC's primary responsibilities are to coordinate large-scale implementation of efforts to prevent and end homelessness in the County. The CoC is governed by the Santa Clara CoC Board (CoC Board), which stands as the driving force committed to supporting and promoting a systems change approach to preventing and ending homelessness in the County. The CoC Board is comprised of the same individuals who serve on the Destination: Home Leadership Board. Destination: Home is a public-private partnership committed to collective impact strategies to end chronic homelessness, and leads the development of community-wide strategy related to the CoC's work. The County's Office of Supportive Housing serves as the Collaborative Applicant for the CoC, and is responsible for implementing by-laws and protocols that govern the operations of the CoC. The Office of Supportive Housing is also responsible for ensuring that the CoC meets the requirements outlined under the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH). In the winter of 2015, Destination: Home and the CoC released a Community Plan to End Homelessness in Santa Clara County (the Plan), which outlines a roadmap for community-wide efforts to end homelessness in the County by 2020. The strategies and action steps included in the plan were informed Annual Action Plan 2020 9 by members who participated in a series of community summits designed to address the needs of homeless populations from April to August 2014. The Plan identifies strategies to address the needs of homeless persons in the County, including chronically homeless individuals and families, families with children, veterans, and unaccompanied youth. Additionally, it also intended to address the needs of persons at risk of homelessness. The City is represented on the CoC by its Human Services Manager. Members of the CoC meet on a monthly basis in various work groups to ensure successful implementation components of the Plan action steps. A Community Plan Implementation Team, which includes members of the CoC and other community stakeholders, meets quarterly to evaluate progress toward the Plan's goals, identify gaps in homeless services, establish funding priorities, and pursue an overall systematic approach to address homelessness. Describe consultation with the Continuum(s) of Care that serves the jurisdiction's area in determining how to allocate ESG funds, develop performance standards for and evaluate outcomes of projects and activities assisted by ESG funds, and develop funding, policies and procedures for the operation and administration of HMIS The City of Palo Alto does not receive ESG funds. 2. Describe Agencies, groups, organizations and others who participated in the process and describe the jurisdiction’s consultations with housing, social service agencies and other entities Annual Action Plan 2020 10 Table 3 – Agencies, groups, organizations who participated 1 Agency/Group/Organization Abilities United Agency/Group/Organization Type Services-Persons with Disabilities What section of the Plan was addressed by Consultation? Non-Homeless Special Needs Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 2 Agency/Group/Organization Afghan Center Agency/Group/Organization Type Cultural Organization What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 3 Agency/Group/Organization Aging Services Collaborative of Santa Clara County Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 4 Agency/Group/Organization California Housing Odd Fellows Foundation Agency/Group/Organization Type Housing Services-Children Community/Family Services Organization What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. Annual Action Plan 2020 11 5 Agency/Group/Organization Casa de Clara San Jose Catholic Worker Agency/Group/Organization Type Services-homeless Services-Health What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 6 Agency/Group/Organization CATHOLIC CHARITIES OF SANTA CLARA COUNTY Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 7 Agency/Group/Organization CITY OF CAMPBELL Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Strategic Plan and Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 8 Agency/Group/Organization City of Cupertino Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 9 Agency/Group/Organization City of Gilroy Agency/Group/Organization Type Other government - Local Annual Action Plan 2020 12 What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 10 Agency/Group/Organization City of Mountain View Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 11 Agency/Group/Organization BILL WILSON CENTER Agency/Group/Organization Type Services-Children What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 12 Agency/Group/Organization City of Palo Alto - Human Relations Commission Agency/Group/Organization Type Other government - Local Civic Leaders What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 13 Agency/Group/Organization City of San Jose Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Annual Action Plan 2020 13 Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 14 Agency/Group/Organization City of Santa Clara Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 15 Agency/Group/Organization City of Sunnyvale Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 16 Agency/Group/Organization Coldwell Banker Agency/Group/Organization Type Business Leaders What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 17 Agency/Group/Organization Community School of Music and Arts Agency/Group/Organization Type Community Family Services and Organizations What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. Annual Action Plan 2020 14 18 Agency/Group/Organization COMMUNITY SERVICES AGENCY OF MOUNTAIN VIEW AND LOS ALTOS Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. Identify any Agency Types not consulted and provide rationale for not consulting There were no agency types that were not consulted during the Consolidated Plan process. Other local/regional/state/federal planning efforts considered when preparing the Plan Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan? Continuum of Care Regional Continuum of Care Council The CoC works to alleviate the impact of homelessness in the community through the cooperation and collaboration of social service providers. This effort aligns with the Strategic goal to support activities to end homelessness. City of Palo Alto Housing Element (2015-2023) City of Palo Alto The Housing Element serves as a policy guide to help the City meet its existing and future housing needs. This effort aligns with the Strategic Plan's goal to assist in the creation and preservation of affordable housing. 2012-2014 Comprehensive HIV Prevention & Care Santa Clara County HIV Planning Council for Prevention and Care This plan provides a roadmap for the Santa Clara County HIV Planning Council for Prevention and Care to provide a comprehensive and compassionate system of HIV prevention and care services for the County. This effort aligns with the Strategic Plan's goal to support activities that strengthen neighborhoods through the provision of community services and public improvements. Annual Action Plan 2020 15 Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan? Affordable Housing Funding Landscape & Local Best Cities Association of Santa Clara County and Housing Trust Silicon Valley This report provides a comparison of the different funding strategies available for affordable housing in the County, and the best practices for funding new affordable housing. This effort aligns with the Strategic Plan's goal to assist in the creation and preservation of affordable housing. Regional Housing Need Plan for the San Francisco B Association of Bay Area Governments This plan analyzes the total regional housing need for the County and all of the Bay Area. This effort aligns with the Strategic Plan's goal to assist in the creation and preservation of affordable housing Community Plan to End Homelessness in Santa Clara Destination: Home The Community Plan to End Homelessness in the County is a five-year plan to guide governmental actors, nonprofits, and other community members as they make decisions about funding, programs, priorities and needs. This effort aligns with the Strategic Plan's goal to support activities to end homelessness. Palo Alto's Infrastructure: Catching Up, Keeping U City of Palo Alto Infrastructure Blue Ribbon Plan This plan details recommendations for infrastructure maintenance and replace, as well as identifies potential sources of funding. This effort aligns with the Strategic Plan's goal to support activities that strengthen neighborhoods through the provision of community services and public improvements. City of Palo Alto Comprehensive Plan (2030) City of Palo Alto This plan is the primary tool for guiding future development in Palo Alto. It provides a guide for long term choices and goals for the City future. This effort aligns with the Strategic Plan's goal to support activities that strengthen neighborhoods through the provision of community services and public improvements. Table 4 – Other local / regional / federal planning efforts Narrative (optional) The Entitlement Jurisdictions in Santa Clara County collaborated on preparation of their 2015- 2020 Consolidated Plans. The outreach and the regional needs assessment for these jurisdictions was a coordinated effort. The CoC and the County were involved in the formation of the Consolidated Plan and will be integral in its implementation. Annual Action Plan 2020 16 As standard practice, CDBG entitlement jurisdictions from throughout the County hold quarterly meetings known as the CDBG Coordinators Group. These meetings are often attended by HUD representatives and their purpose is to share information, best practices, new developments, and federal policy and appropriations updates among the local grantee staff, as well as to offer a convenient forum for HUD to provide ad-hoc technical assistance related to federal grant management. Meeting agendas cover such topics as projects receiving multi- jurisdictional funding, performance levels and costs for contracted public services, proposed annual funding plans, HUD program administration requirements, and other topics of mutual concern. These quarterly meetings provide the opportunity for the City to consult with other jurisdictions on its proposed use of federal funds for the upcoming Program Year. The CDBG Coordinators Group meetings are often followed by a Regional Housing Working Group meeting, which is open to staff of entitlement and non-entitlement jurisdictions. The Working Group provides a forum for jurisdictions to develop coordinated responses to regional housing challenges. Annual Action Plan 2020 17 AP-12 Participation – 91.105, 91.200(c) 1. Summary of citizen participation process/Efforts made to broaden citizen participation Summarize citizen participation process and how it impacted goal-setting On October 18, 2010, the Palo Alto City Council adopted an amended Citizen Participation Plan that utilizes the Human Relations Commission (HRC), rather than a separate Citizen Advisory Committee, to promote and encourage citizen participation in the planning, implementation and assessment of the CDBG Program. The HRC is uniquely positioned to understand and consider the needs of low and very low- income persons, members of minority groups, the elderly, persons with disabilities, and residents of neighborhoods where CDBG activities may be undertaken. Thus far the revisions to the Citizen Participation Plan have promoted a more coordinate and effective response by the City to the human service needs in the community. A summary of public participation is outlined in Table 5, Citizen Participation Outreach. The Draft Action Plan is available for a 30-day comment period to give citizens an opportunity to offer comments. Annual Action Plan 2020 18 Citizen Participation Outreach Sort Order Mode of Outreach Target of Outreach Summary of response/attendance Summary of comments received Summary of comments not accepted and reasons URL (If applicable) 1 Public Meeting Non- targeted/broad community The Human Relations Commission – Selection Committee met on February 25, 2019 to discuss the FY 19/20 funding allocations. Representative from one agency requesting CDBG funds for FY 19/20 was present. 2 Public Hearing Non- targeted/broad community The Human Relations Commission met on March 14, 2019 to discuss the FY 19/20 funding allocations. Representatives from Catholic Charities, SVILC, LifeMoves, Downtown Streets Team, Project Sentinel and May View Community Health were present. Annual Action Plan 2020 19 Sort Order Mode of Outreach Target of Outreach Summary of response/attendance Summary of comments received Summary of comments not accepted and reasons URL (If applicable) 3 Public Hearing Non- targeted/broad community The Finance Committee is holding a public hearing on April 2, 2019 to discuss the FY 19/20 funding allocations. 4 Public Hearing Non- targeted/broad community The City Council is holding a public hearing on May 6, 2019 to discuss the FY 19/20 funding allocations. 5 Newspaper Ad Non- targeted/broad community A public hearing notice was published in the Daily Post on February 7, 2019 Table 5 – Citizen Participation Outreach Annual Action Plan 2020 20 Expected Resources AP-15 Expected Resources – 91.220(c)(1,2) Introduction In Fiscal Year 2019-20, Palo Alto will allocate approximately $661,045 to eligible activities that address the needs identified in the Consolidated Plan. Anticipated Resources Program Source of Funds Uses of Funds Expected Amount Available Year 1 Expected Amount Available Remainder of ConPlan $ Narrative Description Annual Allocation: $ Program Income: $ Prior Year Resources: $ Total: $ CDBG public - federal Acquisition Admin and Planning Economic Development Housing Public Improvements Public Services 436,335 136,049 88,661 661,045 0 CDBG funds will be used for improvements in lower income neighborhoods, and public services that benefit low income and special needs households. Table 6 - Expected Resources – Priority Table Annual Action Plan 2020 21 Explain how federal funds will leverage those additional resources (private, state and local funds), including a description of how matching requirements will be satisfied Leverage, in the context of the CDBG and HOME, means bringing other local, state, and federal financial resources to maximize the reach and impact of the City’s HUD Programs. HUD, like many other federal agencies, encourages the recipients of federal monies to demonstrate that efforts are being made to strategically leverage additional funds in order to achieve greater results. Leverage is also a way to increase project efficiencies and benefit from economies of scale that often come with combining sources of funding for similar or expanded scopes. Funds will be leveraged if financial commitments toward the costs of a project from a source other than the originating HUD program are documented. The City joined the Santa Clara County's HOME Consortium in 2015. HOME funds can be used to fund eligible affordable housing projects for acquisition, construction and rehabilitation. Starting in FY 2015-2016 developers of affordable housing projects were eligible to competitively apply through an annual RFP process directly to the County for HOME funds to help subsidize affordable housing projects in Palo Alto. If the City receives HOME dollars from its participation in the HOME consortium, the required 25 percent matching funds will be provided from the City’s Affordable Housing Fund, which is comprised of two sub-funds: the Commercial Housing Fund and the Residential Housing Fund. As of January 2019, the Commercial Housing Fund had an available balance of approximately $9,600,000 and the Residential Housing Fund had an available balance of $4,900,000. To date, no projects within the City have been funded through the HOME Consortium. Moving forward, the City plans to increase outreach to developers in the City to provide additional information on the HOME Consortium and available funding. Other Federal Grant Programs In addition to the entitlement dollars listed above, the federal government has several other funding programs for community development and affordable housing activities. These include: Section 8 Housing Choice Voucher Program, Section 202, Section 811, the Affordable Housing Program (AHP) through the Federal Home Loan Bank, and others. It should be noted that the City would not be the applicant for these funding sources as many of these programs offer assistance to affordable housing developers rather than local jurisdictions. County and Local Housing and Community Development Sources There are a variety of countywide and local resources that support housing and community development programs. Some of these programs offer assistance to local affordable housing developers and community organizations while others provide assistance directly to individuals. Annual Action Plan 2020 22 These resources are discussed below: Palo Alto Commercial Housing Fund: The Commercial Housing fund is used primarily to increase the number of new affordable housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers of commercial and industrial projects. As of January, 2019 the Commercial In-Lieu Fund had an available balance of approximately $9,600,000. Palo Alto Residential Housing Fund: The Residential Housing Fund is funded with mitigation fees provided under Palo Alto's Below Market Rate (BMR) housing program from residential developers and money from other miscellaneous sources, such as proceeds from the sale or lease of City property. As of January, 2019 the Residential Housing In-Lieu Fund had an available balance of $4,900,000. Annual Action Plan 2020 23 If appropriate, describe publically owned land or property located within the jurisdiction that may be used to address the needs identified in the plan The City has no surplus vacant land that would be available for the development of housing or services. Sixty-five percent of land in the City is open space. Discussion The City of Palo Alto’s (City) Fiscal Year (FY) 2019-2020 Action Plan covers the time period from July 1, 2019 to June 30 2020 (HUD Program Year 2019). The City’s FY 2019-20 entitlement amount is $436,335. Additionally, the City estimates approximately $136,049 in program income and an estimated $88,661 in available uncommitted funds from the prior program year, bringing the total estimated budget for FY 2019-2020 to $661,045. The U.S. Department of Housing and Urban Development (HUD) allocations are critical, however, the allocations are not sufficient to overcome all barriers and address all of the needs that low-income individuals and families face in attaining self-sufficiency. The City will continue to leverage additional resources to successfully provide support and services to the populations in need. Currently, the City is not eligible to receive direct funding under the HOME Investment Partnership Act (HOME), Emergency Solutions Grant (ESG), or Housing Opportunities for Persons with AIDS (HOWPA). Annual Action Plan 2020 24 Annual Goals and Objectives AP-20 Annual Goals and Objectives Goals Summary Information Sort Order Goal Name Start Year End Year Category Geographic Area Needs Addressed Funding Goal Outcome Indicator 1 Homelessness 2015 2020 Homeless CDBG: $59,874 Public service activities for Low/Moderate Income Housing Benefit: 481 Persons Assisted 2 Affordable Housing 2015 2020 Affordable Housing CDBG: Homeowner Housing Rehabilitated: Household Housing Unit 3 Strengthen Neighborhoods 2015 2020 Non-Homeless Special Needs Non-Housing Community Development CDBG: $156,000 Public service activities other than Low/Moderate Income Housing Benefit: 649 Persons Assisted 4 Fair Housing 2015 2020 Non-Housing Community Development CDBG: $31,587 Public service activities other than Low/Moderate Income Housing Benefit: 15 Persons Assisted 5 Economic Development 2015 2020 Non-Housing Community Development CDBG: $330,695 Jobs created/retained: 30 Jobs Table 7 – Goals Summary Annual Action Plan 2020 25 Goal Descriptions 1 Goal Name Homelessness Goal Description Support activities to end homelessness. 2 Goal Name Affordable Housing Goal Description Assist in the creation and preservation of affordable housing for low income and special needs households. 3 Goal Name Strengthen Neighborhoods Goal Description Support activities that strengthen neighborhoods through the provision of community services and public improvements to benefit low income and special needs households. 4 Goal Name Fair Housing Goal Description Promote fair housing choices. 5 Goal Name Economic Development Goal Description Expanded economic opportunities for low income households. Annual Action Plan 2020 26 Projects AP-35 Projects – 91.220(d) Introduction The Consolidated Plan goals below represent high priority needs for the City of Palo Alto and serve as the basis for the strategic actions the City will use to meet these needs. The goals, listed in no particular order, are: - Assist in the creation and preservation of affordable housing for low income and special needs households. - Support activities to end homelessness. - Support activities that strengthen neighborhoods through the provision of community services and public improvements to benefit low income and special needs households. - Promote fair housing choice. - Expand economic opportunities for low income households. Projects Table 8 - Project Information # Project Name 1 Silicon Valley Independent Living Center 2 Catholic Charities 3 LifeMoves 4 PAHC Management & Services Corporation 5 YWCA of Silicon Valley 6 Project Sentinel 7 City of Palo Alto 8 Downtown Streets Inc. 9 MayView Community Health Describe the reasons for allocation priorities and any obstacles to addressing underserved needs The City awards CDBG funding to nonprofit agencies to provide public services and housing for low income and special needs households. The City operates on a two-year grant funding cycle for CDBG Annual Action Plan 2020 27 grants. The City allocates its CDBG funds to projects and programs that will primarily benefit 0-50% AMI households, the homeless and special needs populations. The allocation of funds is made based on the needs identified in the 2015-2020 Consolidated Plan. Annual Action Plan 2020 28 AP-38 Project Summary Project Summary Information Annual Action Plan 2020 29 1 Project Name Silicon Valley Independent Living Center Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $6,000 Description Housing and Emergency Housing Services Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 24 persons will be assisted. Location Description Citywide. Planned Activities Silicon Valley Independent Living Center provides assistance for individuals with disabilities and their families to transition from homelessness, health care facilities, unstable or temporary housing to permanent affordable, accessible, integrated housing with emergency assistance, security deposits, rent, information, & referral, and other basic essentials. 2 Project Name Catholic Charities Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $10,000 Description Long-Term Care Ombudsman Program Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 260 persons will be assisted. Location Description Long-term care and skilled nursing facilities throughout the City. Annual Action Plan 2020 30 Planned Activities Catholic Charities assists in problem resolution and advocates for the rights of residents of long term care facilities in Palo Alto. The majority of the clients assisted are low-income, frail, elderly, and chronically ill. This program assists these vulnerable, dependent and socially isolated residents receive the care and placement to which they are entitled. 3 Project Name LifeMoves Target Area Goals Supported Homelessness Needs Addressed Homelessness Funding CDBG: $29,937 Description Opportunity Services Center Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 350 persons will be assisted. Location Description 33 Encina Way, Palo Alto, CA 94301 Planned Activities LifeMoves provides basic necessities for persons who are homeless or at-risk of becoming homeless. The Opportunity Services Center is a comprehensive, one-stop, multi-service, day drop-in center that provides critical services for homeless Palo Alto residents. Specifically, the facility provides showers, laundry, clothing, snacks, case management, and shelter/housing referral services. 4 Project Name PAHC Management & Services Corporation Target Area Goals Supported Homelessness Needs Addressed Homelessness Funding CDBG: $29,937 Description SRO Resident Support Services Target Date 6/30/2020 Annual Action Plan 2020 31 Estimate the number and type of families that will benefit from the proposed activities 131 persons will be assisted Location Description 439 Emerson Street and 735 Alma Street Palo Alto, CA 94301 Planned Activities Palo Alto Housing Corporation will provide counseling and supportive case management services for low-income residents of single room occupancy facilities in order to help them maintain housing stability. Activities include financial counseling, health maintenance, information and referral, problem solving, employment assistance, crisis intervention and case management. 5 Project Name YWCA of Silicon Valley Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $5,000 Description Domestic Violence Services Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 15 persons will be assisted Location Description Citywide Planned Activities Support Network for Battered Women, a Division of YWCA will provide individuals and families experiencing domestic violence, the program provides a bilingual domestic violence hotline, an emergency shelter, crisis counseling, legal assistance, court accompaniment, individual and group therapy, support groups, children’s therapy groups, preventative education, safety planning and community referrals. 6 Project Name Project Sentinel Target Area Goals Supported Fair Housing Needs Addressed Fair Housing Annual Action Plan 2020 32 Funding CDBG: $31,587 Description Fair Housing Services Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 15 persons will be assisted Location Description Citywide Planned Activities Project Sentinel will provide community education and outreach regarding fair housing law and practices, investigation, counseling and legal referral for victims of housing discrimination, and analyses for City staff and officials regarding fair housing practices. California and federal fair housing laws assure specific protected classes the right to be treated in terms of their individual merits and qualifications in seeking housing. Unfortunately, some people are not aware of the law or their rights. 7 Project Name City of Palo Alto Target Area Goals Supported Homelessness Affordable Housing Strengthen Neighborhoods Fair Housing Economic Development Needs Addressed Community Services and Public Improvements Homelessness Affordable Housing Fair Housing Economic Development Funding CDBG: $82,889 Description Planning and Administration Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities The City will provide general administrative support to the CDBG program. Location Description Citywide Annual Action Plan 2020 33 Planned Activities Administer the Administrative costs for the overall management, coordination, and evaluation of the CDBG program, and the project delivery costs associated with bringing projects to completion. 8 Project Name Downtown Streets Inc. Target Area Goals Supported Economic Development Needs Addressed Economic Development Funding CDBG: $330,695 Description Workforce Development Program Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 30 jobs will be created for very low income and low-income individuals. Location Description Citywide. Planned Activities The Workforce Development Program will provide a transition from unemployment and homelessness to regular employment and housing through case management, job training, mentoring, housing, and transportation assistance. Downtown Streets Team will screen and prepare applicants and will use their community connections to provide training and job opportunities. 9 Project Name May View Community Health Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Strengthen Neighborhoods Funding CDBG: $135,000 Description Establishment of Dental Program & Renovation Target Date 6/30/2020 Estimate the number and type of families that will benefit from the proposed activities 350 persons will be assisted. Annual Action Plan 2020 34 Location Description City wide. Program will be administered by a non-profit partner. Planned Activities May View will be able to provide up to 50 dental visits a day, for a total of 12,000 visits per year through this rehabilitation project. It is anticipated that this project will expand access to dental care for 900 local low and moderate-income residents. Annual Action Plan 2020 35 AP-50 Geographic Distribution – 91.220(f) Description of the geographic areas of the entitlement (including areas of low-income and minority concentration) where assistance will be directed Not applicable. The City has not established specific target areas to focus the investment of CDBG funds. Geographic Distribution Target Area Percentage of Funds N/A N/A Table 9 - Geographic Distribution Rationale for the priorities for allocating investments geographically Not applicable. Discussion See discussion above. Annual Action Plan 2020 36 Affordable Housing AP-55 Affordable Housing – 91.220(g) Introduction Palo Alto has identified affordable housing as the primary objective for the expenditure of CDBG funds in the Consolidated Plan. The City will continue to allocate funding available to activities and projects that meet this objective. A detailed discussion of how HUD entitlements will be used to support affordable housing needs within the City is provided in AP-20, with the number of households to be assisted itemized by goal. One Year Goals for the Number of Households to be Supported Homeless 0 Non-Homeless 0 Special-Needs 0 Total 0 Table 10 - One Year Goals for Affordable Housing by Support Requirement One Year Goals for the Number of Households Supported Through Rental Assistance 0 The Production of New Units 0 Rehab of Existing Units 0 Acquisition of Existing Units 0 Total 0 Table 11 - One Year Goals for Affordable Housing by Support Type Discussion Please see discussion above. Annual Action Plan 2020 37 AP-60 Public Housing – 91.220(h) Introduction The Santa Clara County Housing Authority (SCCHA) assists approximately 17,000 households through the federal Section 8 Housing Choice Voucher program (Section 8). HACSC also develops, controls, and manages more than 2,100 affordable rental housing properties throughout the County. SCCHA’s programs are targeted toward LMI households and more than 80 percent of their client households are extremely low-income families, seniors, veterans, persons with disabilities, and formerly homeless individuals. In 2008, SCCHA entered a ten-year agreement with HUD to become a Moving to Work (MTW) agency. The MTW program is a federal demonstration program that allows greater flexibility to design and implement more innovative approaches for providing housing assistance. Additionally, SCCHA has used LIHTC financing to transform and rehabilitate 535 units of public housing into SCCHA-controlled properties. The agency is an active developer of affordable housing and has either constructed, rehabilitated, or assisted with the development of more than 30 housing developments that service a variety of households, including special needs households. Actions planned during the next year to address the needs to public housing Not applicable. SCCHA owns and manages four public housing units, which are all located in the City of Santa Clara. Actions to encourage public housing residents to become more involved in management and participate in homeownership Although the majority of their units have been converted to affordable housing stock, SCCHA is proactive in incorporating resident input into the agency’s policy-making process. An equitable and transparent policy-making process that includes the opinions of residents is achieved through the involvement of two tenant commissioners on the SCCHA board. SCCHA has been a MTW agency since 2008. In this time the agency has developed 31 MTW activities. The vast majority of its successful initiatives have been aimed at reducing administrative inefficiencies, which provides resources for programs aimed at LMI families. If the PHA is designated as troubled, describe the manner in which financial assistance will be Annual Action Plan 2020 38 provided or other assistance Not applicable. Discussion Please see discussion above. Annual Action Plan 2020 39 AP-65 Homeless and Other Special Needs Activities – 91.220(i) Introduction The Santa Clara County region is home to the fourth-largest population of homeless individuals (7,394 single individuals) and the highest percentage of unsheltered homeless of any major city (74 percent of homeless people sleep in places unfit for human habitation). The homeless assistance program planning network is governed by the Santa Clara Continuum of Care (CoC), governed by the Destination: Home Leadership Board, who serves as the CoC Board of Directors. The membership of the CoC is a collaboration of representatives from local jurisdictions comprised of community-based organizations, the Housing Authority of Santa Clara, governmental departments, health service agencies, homeless advocates, consumers, the faith community, and research, policy and planning groups. For many years, the CoC utilized a homeless services system referred to as the Homeless Management Information System (HMIS). The HMIS monitored outcomes and performance measures for all the homeless services agencies funded by the County. Last year, the CoC and service providers transitioned to a new system referred to as Clarity. The system provides additional tools and resources to assist the CoC and service providers to track information regarding clients served. Describe the jurisdictions one-year goals and actions for reducing and ending homelessness including Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs In January 2019, a Point in Time (PIT) count was conducted for Santa Clara County by the City of San Jose in conjunction with the County of Santa Clara. The PIT is an intense survey used to count the number of homeless living throughout Santa Clara County on the streets, in shelters, safe havens or in transitional housing, or in areas not meant for human habitation. The survey was conducted by hundreds of volunteers who asked those living on the streets, as well as the residents of shelters, safe havens and transitional housing, to respond to questions related to their needs. A portion of the survey addresses the needs of those surveyed. Palo Alto financially contributed to this effort. Addressing the emergency shelter and transitional housing needs of homeless persons In addressing the Consolidated Plan and the Continuum of Care strategic plans, Palo Alto will provide funding for essential services and operations to local emergency shelters and transitional housing facilities. The facilities provide shelter and services to homeless families with children, single parents with children, single men and women, victims of domestic violence and sexual abuse, homeless veterans, and the population living on the street. One example includes the YWCA which provides emergency shelter to victims of domestic violence and their children from the City of Palo Alto. Helping homeless persons (especially chronically homeless individuals and families, families Annual Action Plan 2020 40 with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again The City spends part of its CDBG funds and local funds toward a variety of public services to address the needs of homeless and very low-income persons. Services provided include free food, clothing, medical care, legal assistance, and rental assistance. The City allocates funding to the following homeless service providers: CDBG Funded LifeMoves - Opportunity Services Center $29,937. The Opportunity Services Center facility in Palo Alto provides a clean, safe environment and resources for low income or homeless persons including bagged groceries, hot meals, a rotating church shelter program, information and referral, shower and laundry facilities, case management, and money management (payee) programs, clothing and health services. A daily hot meal is provided at a different location each day and bagged groceries are distributed daily at the Downtown Food Closet. Downtown Streets Team – Workforce Development Program $330,695. This economic development program helps motivated graduates of the Downtown Streets Team programs move on to stable employment. The program includes mentoring, counseling, job readiness, job training, and assistance. Palo Alto Housing Corporation – SRO Tenant Counseling $29,937. Provides counseling and case- management services for the low-income residents and prospective residents of single room occupancy hotels in Palo Alto. Many SRO residents have a history of homelessness and special needs. The program plays a vital role in helping residents maintain their stability and housing. May View Community Health – Establishment of Dental Program & Renovation $135, 000. May View will be able to provide up to 50 dental visits a day, for a total of 12,000 visits per year through this rehabilitation project. It is anticipated that this project will expand access to dental care for 900 local residents. Note: Please see "discussion" section for HSRAP Funded homeless service providers. Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are: being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, Annual Action Plan 2020 41 foster care and other youth facilities, and corrections programs and institutions); or, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs. HSRAP Funded Abilities United – Disability Services: $45,808. Provides services and activities for adults & children with mental & physical disabilities. Adolescent Counseling Services (Outlet Program) -$10,560. Supports the wellbeing of all teens, tweens, & young adults in Santa Clara & San Mateo Counties. Community Working Group - $30,750. Support for continued operation & maintenance of the Day Services Center Counseling & Support Services for Youth (CASSY) -$35,875. A school-based youth mental health support program Downtown Streets Team – Downtown Streets: $76,436. Identifies motivated homeless individuals & provides them with jobs cleaning & beautifying the downtown area in exchange for housing & food vouchers. The program includes counseling, coaching & training to help program participants build self- esteem, confidence & connections in the community. Dreamcatchers - $24,199. Creates vibrant afterschool classrooms where students learn to thrive. KARA - $19,029. Kara provides grief support to children, teens, families & adults. La Comida de California – Hot Meals for The Elderly: $36,372. Daily meal program for the elderly. LifeMoves – $37,281. A nonprofit committed to ending the cycle of homelessness for families & individuals in San Mateo & Santa Clara Counties. May View Health Center – Health Care for Low Income & Homeless Palo Alto residents: $27,665. Basic primary health care services & health education & referral services for uninsured low-income & homeless individuals from the Palo Alto area. Momentum for Mental Health – Homeless Outreach Program: $45,842. Momentum for Mental Health outreach program provides emergency on-call services to assist local mentally ill homeless persons. Palo Alto Housing - $20,501. This non-profit agency builds, develops, acquires, & manages low- & Annual Action Plan 2020 42 moderate-income housing in Palo Alto & the San Francisco Bay Area. PARCA - $11,233. On-site supervision, independent living training & social & recreational activities at the Page Mill Court assisted living apartment complex Peninsula HealthCare Connection – Project Downtown Connect: $30,426. Provider of health care services at the Opportunity Center of Palo Alto. Project Downtown Connect provides Section 8 vouchers to eligible homeless individuals & families. SALA – Legal Assistance to Elders: $14,761. Senior Adults Legal Assistance (SALA) provides affordable legal assistance to elders. Vista Center for the Blind or Visually Impaired - $27,137. Empowers individuals who are blind or visually impaired to embrace life to the fullest through evaluation, counseling, education & training. Youth Community Service - $22,205. Builds life skills & leadership through meaningful service learning experiences that encourage youth to make purposeful school & life choices. Discussion Please see discussion above regarding the City’s subrecipients. Annual Action Plan 2020 43 AP-75 Barriers to affordable housing – 91.220(j) Introduction: The incorporated and unincorporated jurisdictions within the County face barriers to affordable housing that are common throughout the Bay Area. High on the list is the lack of developable land, which increases the cost of available lands and increases housing development costs. Local opposition is another common obstacle as many neighbors have strong reactions to infill and affordable housing developments. Their opposition is often based on misconceptions, such as a foreseen increase in crime; erosion of property values; increase in parking and traffic congestion; and overwhelmed schools. However, to ensure a healthy economy the region must focus on strategies and investment that provide housing for much of the region’s workforce – for example, sales clerks, secretaries, firefighters, police, teachers, and health service workers – whose incomes significantly limit their housing choices. It should be noted that in a constrained housing supply market, when housing developments produce housing that is relatively affordable, higher income buyers and renters generally outbid lower income households. A home’s final sale or rental price will typically exceed the projected sales or rental costs. Public subsidies are often needed to guarantee affordable homes for LMI households. Actions it planned to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment Palo Alto is addressing the barriers to affordable housing through the following programs and ordinances: Context-Based Design Codes The City adopted form-based codes in 2006 to ensure and encourage residential development by following context-based design guidelines to meet increased density needs. The code encourages the creation of walkable, pedestrian-oriented neighborhoods, following green building design principles, and increasing density along transit corridors and in mixed-use neighborhoods. The Context-Based Design Code allows for increased density and mixed-use buildings in a way that enhances neighborhood character and walkability. Density Bonus Ordinance Density bonus provisions are a tool for attracting and assisting developers in constructing affordable housing. Density bonuses allow a developer to increase the density of a development above what is allowed under standard zoning regulations and provides regulatory relief in the form of concessions. In Annual Action Plan 2020 44 exchange, a developer provides affordable units in the development. In 2004, the California State Legislature lowered the thresholds required to receive a density bonus and increased the number of concessions a developer can receive. The City adopted a Density Bonus Ordinance in January 2014. The density bonus regulations allow for bonuses of 20 to 35 percent, depending on the amount and type of affordable housing provided. As required by state law, the regulations also allow for exceptions to applicable zoning and other development standards, to further encourage development of affordable housing. Below Market Rate Housing Program Established in 1974, the City’s BMR Housing Program has been instrumental in the production of affordable housing by requiring developers to provide a certain percentage of units as BMR in every approved project of three units or more. The program originally required that for developments on sites of less than five acres, the developer must provide 15 percent of the total housing units as BMR housing units. If the site was larger than five acres, the developer was required to provide 20 percent of the units as BMR housing. Several court cases have challenged the BMR, or “inclusionary zoning” ordinances in California. Two factors that have received recent attention by the courts include whether inclusionary housing is considered rent control, and whether inclusionary housing and related housing mitigation fees are considered exactions. As a result of ongoing litigation, many cities have suspended or amended the portions of their inclusionary housing requirements that require affordable units to be included in market rate rental developments and many cities have turned, instead, to the use of development impact fees charged on new, market-rate housing and/or commercial development. Known as “Housing Impact Fees” and “Commercial Linkage Fees,” these fees are based on an assessment of the extent to which the development of new market-rate housing or commercial uses, respectively, generates additional demand for affordable housing. The City recently updated its Commercial and Residential Impact Fee Nexus Studies and adopted two ordinances to make changes to its BMR program and adopted a new fee structure. The ordinances became effective on June 19, 2017. Discussion: Please see above. Annual Action Plan 2020 45 AP-85 Other Actions – 91.220(k) Introduction: This section discusses the City’s efforts in addressing the underserved needs, expanding and preserving affordable housing, reducing lead-based paint hazards, and developing institutional structure for delivering housing and community development activities. Actions planned to address obstacles to meeting underserved needs The diminishing amount of available funds continues to be an obstacle to addressing the needs of underserved populations. To address this, the City supplements its CDBG funding with other resources and funds, including: • The City’s Human Service Resource Allocation Process (HSRAP) provides approximately $1,500,749 from the General Fund in support of human services. The HSRAP funds, in conjunction with the CDBG public service funds, are distributed to local non-profit agencies. • The Palo Alto Commercial Housing Fund is utilized to increase the number of new affordable housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers of commercial and industrial projects. • The Palo Alto Residential Housing Fund is funded with mitigation fees provided under Palo Alto’s BMR housing program from residential developers and monies from other miscellaneous sources, such as proceeds from the sale or lease of City property. • The City’s Below Market Rate Emergency Fund was authorized in 2002 to provide funding on an ongoing basis for loans to BMR owners for special assessment loans and for rehabilitation and preservation of the City’s stock of BMR ownership units. • HOME Program funds are available on an annual competitive basis through the State of California HOME program, and the County’s HOME Consortium. Actions planned to foster and maintain affordable housing The City will foster and maintain affordable housing by continuing the following programs and ordinances: • The Below Market Rate Emergency Fund which provides funding on an ongoing basis for loans to BMR owners for special assessment loans and for rehabilitation and preservation of the City’s stock of BMR ownership units. • The Commercial Housing Fund is utilized to increase the number of new affordable housing units for Palo Alto’s work force. • The Residential Housing Fund is used to assist new housing development and/or the acquisition, rehabilitation or the preservation of existing housing for affordable housing. • The Density Bonus Ordinance, adopted by the City Council in January 2014, allows for bonuses Annual Action Plan 2020 46 of 20 to 35 percent, depending on the amount and type of affordable housing provided. The City’s participation in the County's HOME Consortium allows developers of affordable housing projects in Palo Alto to be eligible to competitively apply through an annual RFP process directly to the County for HOME funds to help subsidize the Actions planned to reduce lead-based paint hazards The City’s housing and CDBG staff provides information and referral to property owners, developers, and non-profit organizations rehabilitating older housing about lead-based paint (LBP) hazards. Any house to be rehabilitated with City financial assistance is required to be inspected for the existence of LBP and LBP hazards. The City provides financial assistance for the abatement of LBP hazards in units rehabilitated with City funding. The City also requires that contractors are trained and certified in an effort to decrease the risk of potential use of LBP in new units. All development and rehabilitation projects must be evaluated according to HUD’s Lead Safe Housing Rule 24 CFR Part 35. Actions planned to reduce the number of poverty-level families The City, in its continuing effort to reduce poverty, will prioritize funding agencies that provide direct assistance to the homeless and those in danger of becoming homeless. In FY 2019-2020, these programs will include the following: • Downtown Streets Team is a nonprofit in the City that works to reduce homelessness through a “work first” model. Downtown Streets Team uses their community connections to provide training and job opportunities to homeless people, specifically in the downtown area. The Downtown Streets Team has helped 802 people find housing and 745 find jobs since its inception in 2005. The Downtown Streets Team has initiatives in Palo Alto, Sunnyvale, San Jose, and San Rafael. Actions planned to develop institutional structure The City is striving to improve intergovernmental and private sector cooperation to synergize efforts and resources and develop new revenues for community service needs and the production of affordable housing. Collaborative efforts include: • Regular quarterly meetings between entitlement jurisdictions at the CDBG Coordinators Meeting and Regional Housing Working Group. • Joint jurisdiction Request for Proposals and project review committees • Coordination on project management for projects funded by multiple jurisdictions • The established of the HOME Consortium with the county of Santa Clara and the cities of Gilroy Annual Action Plan 2020 47 and Cupertino to provide additional funding opportunities for affordable housing projects. Recent examples include the effort by the County to create a regional affordable housing fund, using former redevelopment funds that could be returned to the County to use for affordable housing. Another effort underway involves the possible use of former redevelopment funds to create a countywide pool for homeless shelters and transitional housing. These interactions among agencies generate cohesive discussion and forums for bridging funding and service gaps on a regional scale. Actions planned to enhance coordination between public and private housing and social service agencies The City benefits from region-wide network of housing and community development partners, such as the County and the CoC. To improve intergovernmental and private sector cooperation, the City will continue to participate with other local jurisdictions and developers in sharing information and resources. In addition to the actions listed above, the City will continue to coordinate with the City’s human services funding efforts to comprehensively address its community needs. Discussion: Please see discussions above. Annual Action Plan 2020 48 Program Specific Requirements AP-90 Program Specific Requirements – 91.220(l)(1,2,4) Introduction: The charts below provide additional information regarding the CDBG program income and other CDBG program requirements. Community Development Block Grant Program (CDBG) Reference 24 CFR 91.220(l)(1) Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included in projects to be carried out. 1. The total amount of program income that will have been received before the start of the next program year and that has not yet been reprogrammed 136,049 2. The amount of proceeds from section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in the grantee's strategic plan. 0 3. The amount of surplus funds from urban renewal settlements 0 4. The amount of any grant funds returned to the line of credit for which the planned use has not been included in a prior statement or plan 0 5. The amount of income from float-funded activities 0 Total Program Income: 136,049 Other CDBG Requirements 1. The amount of urgent need activities 0 2. The estimated percentage of CDBG funds that will be used for activities that benefit persons of low and moderate income. Overall Benefit - A consecutive period of one, two or three years may be used to determine that a minimum overall benefit of 70% of CDBG funds is used to benefit persons of low and moderate income. Specify the years covered that include this Annual Action Plan. 100.00% Annual Action Plan 2020 50 Attachments Annual Action Plan 2020 53 Grantee Unique Appendices Annual Action Plan 2020 54 City of Palo Alto (ID # 10161) Finance Committee Staff Report Report Type: Action Items Meeting Date: 4/2/2019 City of Palo Alto Page 1 Council Priority: Fiscal Sustainability Summary Title: FY 2020 Preliminary Electric and Gas Rates Title: Preliminary Rate Changes for the Electric and Gas Utilities for Fiscal Year 2020 From: City Manager Lead Department: Utilities Recommendation This item is for discussion and no action is requested. Staff will use input from the Finance Committee on its preliminary rate projections for the Electric and Gas utilities to finalize its recommended FY 2020 Electric and Gas Financial Plans and proposed rate changes. Executive Summary The attached presentation describes staff’s preliminary rate projections for the Electric and Gas Utilities. This is an expanded presentation from what was provided to the Utilities Advisory Commission (UAC) at its February 6, 2019 meeting, and contains some slightly revised figures for electric and gas. The preliminary retail rate forecast over the next five fiscal years is shown in the table below, along with the overall impact to the median residential bill. The rate changes shown are preliminary estimates. Actual rate changes will be based on the cost of service studies for each utility and may differ modestly by customer class and for individual customers depending on consumption patterns. Updated cost of service studies for Water and Gas are nearing completion and will be factored into Staff proposals for FY 2020. Wastewater Collection will be done in FY 2020, while the Electric study was recently completed in 2016. Table 1: Projected Rate Increases City of Palo Alto Page 2 Staff seeks input from the Finance Committee prior to finalizing the Utilities Financial Plans and developing recommendations for rate changes that would be effective July 1, 2019. The proposed rate adjustment recommendations, along with each utility’s Financial Plans, are currently scheduled to be presented to the Finance Committee in April for the Water and Wastewater Collection Utilities, and in May for the Electric and Gas Utilities. As staff continues to refine cost projections and amass current customer data, it is possible that the final rate proposals presented to the Finance Committee and Council may vary from what is provided here. Background Every year staff presents the UAC and Finance Committee with financial forecasts for the Electric, Gas, Water, and Wastewater Collection Utilities and recommends any rate adjustments required to maintain their financial health. These forecasts are memorialized in Financial Plans that comprehensively discuss the outlook for each utility. Before providing recommended Financial Plans and rate changes, staff typically presents a preliminary forecast to get early feedback. As reference, the current year (FY 2019) financial plan for the electric utility is available at: https://www.cityofpaloalto.org/civicax/filebank/documents/64921 And the current year (FY 2019) financial plan for the gas utility is available at: https://www.cityofpaloalto.org/civicax/filebank/documents/64920 Commission Review The UAC reviewed the preliminary financial forecasts at its February 6, 2019 meeting. No recommendation was requested at that meeting, but staff sought input from Commissioners before finalizing the Financial Plans and rate adjustment recommendations. Commissioners had no recommendations as to different rate increase paths. The draft minutes from the UAC’s February 6, 2019 can be found at (web address pending). City of Palo Alto Page 3 Next Steps The UAC reviewed the long-term Financial Plans and proposed rate adjustments for the Wastewater Collection Utility in March, and will review the Electric, Gas and Water Utilities in April. The Finance Committee is tentatively scheduled to review the long-term Financial Plans and proposed rate adjustments in April (for the Water and Wastewater Collection Utilities) and in May (for the Electric and Gas Utilities). Once the Finance Committee has provided its recommendation, notification of any recommended Water, and Wastewater Collection rate increases will be sent to customers giving them the opportunity to protest the proposed changes as required by Article XIIID of the State Constitution (added by Proposition 218). The Financial Plans and proposed new rate schedules will be considered by the City Council with the FY 2020 budget, at which time the public hearing required by Article XIIID of the State Constitution will be held. Environmental Review The Finance Committee’s review of the preliminary financial projections does not meet the definition of a project, pursuant to Section 21065 of the California Environmental Quality Act, thus no environmental Resource Impact The FY 2020 Budget is being developed concurrent with these rates. Depending on final rates, adjustments may be necessary in the FY 2020 Budget at a later time. Attachments: • Attachment A: Preliminary Rate Forecasts - Electric and Gas 1 Preliminary Rate Changes for Electric and Gas, Utilities for FY2020 Finance Committee April 2, 2019 2 Financial Forecast Summary §Review four funds: Electric, Gas, Water and Wastewater Collection §Refuse rate projections included for information §Review of Financial Reserves §Staff projects need for Electric, Gas, Water,and Wastewater Collection rate increases for FY 2020 §Communication plan being prepared §Gas and Water Cost of Service (COSA) updates to be completed this year §Wastewater COSA update to be completed next year 3 FY 2019 Rate Projections FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Electric Utility 6%3%2%0%1% Gas Utility1 4%8%7%6%5% Wastewater 11%12%10%6%4% Water Utility 3%4%4%4%4% Refuse -3%3%3%3% Storm Drain2 2.9%2%to3%2%to3%2%to3%2%to3% Bill Change3 (%)4%5%5%4%3% ($/mo)$11 $15 $14 $11 $11 (1)Gas rate changes are shown with commodity rates held constant. Actual gas commodity rates will vary monthly with wholesale market fluctuations (2) Storm Drain Rates increase annually by CPI (3) Median residential bill is $273.56 as of July 1, 2017 (does not include UUT) 4 FY 2020 Rate Projections FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Electric Utility 8%3%-5%3%-5%3%-5%3%-5% Gas Utility 9%9%7%2%-3%2%-3% Wastewater 7%8%8%8%8% Water Utility 4%3%4%5%5% Refuse -3%3%3%3% Storm Drain 4.5%2%-3%2%-3%2%-3%2%-3% Bill Change (%)4%5%5%4%4% ($/mo)$13 $14 $15 $14 $13 •Rate increases to bring all Operations Reserves to Target level by FY 2024 (five years) •Slight increases due to reduced sales volumes, most notably in electric 5 Ongoing Cost Containment §Consistent with newly approved Utilities Strategic Plan, cost containment is being instituted as an ongoing priority and annual cycle –Fall completion of preliminary out-year rate forecasts –Review by all Divisions for alignment of multiyear strategies §Ongoing management review of personnel actions –Review/revision of position classifications to match evolving needs –Add/Deletion of positions to reflect organizational priorities –Review/approval to fill individual position vacancies in conjunction with ASD Budget Office and Human Resources §Regular review of performance metrics and expenditures 6 Cost Containment Examples §Recently implemented cost control measures: –Gas prepay arrangement for discounted gas (~1M/yr) –Cost savings for gas transmission due to regulatory advocacy (~$250K/yr) –Electric transmission savings due to regulatory advocacy (~$1M/year) –Successfully negotiated with vendor to reduce change request costs for new customer portal (estimated savings of $40k-$100k) –Reduced SAP consultant spending due to process reengineering or developing alternative solutions (estimated savings of $50k) §Potential future cost control measures: –Explore outsourcing hedging and risk management –Enter into prepay deals for existing renewables to reduce costs –Rebalance electric portfolio to reduce cost while maintaining compliance with State mandates and local sustainability goals –Explore ways to reduce merchant fee costs for credit card transactions –Explore potential savings in utility bill printing through paperless billing and reducing printing charges –Switch to new customer information system with reduced support costs 7 Electric Utility 8 Electric Utility Rate Projections §FY 2020 Proposal: 8% rate increase –Operations Reserves below minimum guidelines due to cost increases and reduced customer sales –Other reserves low as well, but could be utilized: •$11.4M in Hydro Stabilization Reserve (Target -$17M) •$41M available in Special Projects Reserve -$10M loan already taken against this reserve –Rate increase are entirely related to cost increases and load loss –will not increase reserves. §Future projections: –3%-5% increases thereafter –Reserve health should slowly recover over several years Electric Utility 9 Electric Utility Basics Electric Utility Palo Alto’s primary business 10 Electric Utility Distribution System Electric Utility 472 miles of distribution line (45% overhead, 55% underground) •Nine substations •2000 overhead transformers •1100 underground/substation transformers 11 Electric Utility Supply Contracts Electric Utility 12 Electric Utility Cost StructureElectric Utility Electric Distribution: The cost to distribute electricity within Palo Alto, including: maintaining and replacing electric infrastructure, customer service, billing, administration, etc. Electric Supply: The cost to buy electricity and transport it to Palo Alto, including operational overhead (e.g. energy scheduling) 13 Long-term Cost Trends Electric Utility Electric Supply: 3.5%/yr Distribution: 3.2%/yr Annualized Increase, FY14-FY19: Annualized Increase, FY20-FY24: Distribution: 4.1%/yr Electric Supply: 1%/yr 14 Electric Supply Cost StructureElectric Utility 15 Electric Supply Cost Forecast Electric Utility Transmission: 13%/yr Generation: 1%/yr Annualized Increase, FY14-FY19: Annualized Increase, FY20-FY24: Transmission: 3%/yr Generation: 0%/yr Overhead: 6%/yr Overhead: 2%/yr •Overhead costs have decreased as NCPA has sought revenue by providing services to more agencies. •Transmission costs have increased dramatically –system replacement, new lines to integrate new generators. CPA partners with others to advocate for cost control. •Renewable projects have come online. In the longer term, generation costs should flatten due to CPA’s long-term fixed price contracts Electric Supply Cost Drivers 17 Long-term Cost Trends Electric Utility Electric Supply: 3.5%/yr Distribution: 3.2%/yr Annualized Increase, FY14-FY19: Annualized Increase, FY20-FY24: Distribution: 4.1%/yr Electric Supply: 1%/yr 18 Electric distribution costs Electric Utility 19 Electric Distribution Cost Trends Electric Distribution Operations: 5%/yr Annualized Increase, FY14-FY19: Annualized Increase, FY20-FY24: Electric Capital Investment: 8%/yr* Electric Distribution Operations: 3%/yr Electric Utility Electric Capital Investment: 7%/yr* •Health, retirement, and associated overhead costs continue to increase •Increased capital investment in the electric distribution system needed due to age of the system. •Underground construction costs have increased substantially as well •Additional contract expense for line crew until internally staffed Operations and Capital Cost Drivers 21 Underground Construction Costs 0 100 200 300 400 500 600 2008 2010 2012 2014 2016 2018 2020 Water ($/FT)Gas ($/FT)Elec U/G ($/FT)Sewer ($/FT) Electric Utility 22 Median Monthly Residential Bill The median Palo Alto residential bill was roughly 40% lower than PG&E as of March 2018 Electric Utility 23 FY 2020 Projected Cost Changes Supply-Related: $1M increase (+) Electric Operations: $1.7M increase (+) Total Cost: 3% increase Electric Capital: $1.2M increase (+) Electric Utility 24 Drivers of FY 2020 Cost Changes §Small increase in purchase costs –shifts in market prices, and FY 2019 included a substantial one-time refund related to one of our contracts §Distribution spending to increase, but costs could be higher contingent on contract line crew utilization Electric Utility 25 FY 2020 Revenue at Current Rates 0 20 40 60 80 100 120 140 160 FY 2019 (projected)FY 2020 (projected) $ (Millions) Costs Rate Revenue Other Revenue Rate Revenue: 8% increase Revenue: 100% of costs Revenue: 100% of costs Electric Utility 26 Electric Cost and Revenue Projections 27 Supply Operations Reserve 28 Distribution Operations Reserve 29 Gas Utility 30 Gas Utility Rate Projections §Rate Design: –One-third of the rate is “supply-related:” gas supply, transmission, and environmental charges. These rates vary monthly according to market-driven costs that are passed directly to customers –Two-thirds of the rate is set based on the City’s costs for maintaining its gas distribution system (gas mains, services, related equipment) §FY 2020 preliminary proposal: –9% customer bill increase due to distribution system rate increases –Supply-related costs will vary with the market and may result in a total customer bill increase that is higher or lower than 9%. §Future projected rate actions –9% for FY 2021 and 7% for FY 2022 (in addition to any supply-related charge variation), inflationary increases thereafter Gas Utility 31 Gas Utility Basics Gas Utility Map of Western natural gas transmission lines “Malin” gas delivery point (70% of Palo Alto gas) (30% of Palo Alto gas) “City gate” gas delivery point (30% of Palo Alto gas) has transmission rights Redwood pipeline –Palo Alto has transmission rights City of Palo Alto gas distribution system: •20,000 meters •205 miles of mains •18,000 service lines 32 Gas Utility Cost StructureGas Utility Gas Distribution: The cost to distribute gas within Palo Alto, including: maintaining and replacing gas infrastructure, customer service, billing, administration, etc. * * * * Market-based pass-through costs. 33 Long-term Cost Trends Gas Utility Supply, Transmission, Environmental: 19%/yr Distribution: 3%/yr Annualized Increase, FY16-FY19: Annualized Increase, FY20-FY24: Distribution: 4%/yr Supply, Transmission, Environmental: 4%/yr* *Forecast is uncertain and will vary with the markets •Gas supply –some volatility in gas market prices. Gas prices have risen in recent years as supplies have become tighter, demand has increased •PG&E gas transmission rates rising to fund safety investments in the wake of the San Bruno disaster •Cap and trade costs continue to rise (as intended by design) •Carbon Neutral Gas Plan Gas Supply-Related Cost Drivers 35 Long-term Cost Trends Gas Utility Supply, Transmission, Environmental: 19%/yr Distribution: 3%/yr Annualized Increase, FY16-FY19: Annualized Increase, FY20-FY24: Distribution: 4%/yr Supply, Transmission, Environmental: 4%/yr* *Forecast is uncertain and will vary with the markets 36 Gas distribution costs Gas Utility 37 Gas Distribution Cost Tr ends Gas Capital: -7%/yr* Gas Operations: 7%/yr Annualized Increase, FY16-FY19: Debt Service: 0%/yr Annualized Increase, FY20-FY24: Gas Capital: 12%/yr* Gas Operations: 2%/yr Gas Utility Debt Service: 0%/yr * No main replacement project budgeted in FY 2019, so CIP spending was unusually low. Gas main replacement spending to resume in FY 2020 ** Funding for crossbore program in FY 2019 leads to unusually high Operations costs. •Health, retirement, and associated overhead costs continue to increase •Underground construction costs have increased substantially as well •Temporary funding ($1M/yr) for three years for crossbore investigations (starting FY 20) •Increases in overhead transfers Operations and Capital Cost Drivers 39 Underground Construction Costs 0 100 200 300 400 500 600 2008 2010 2012 2014 2016 2018 2020 Water ($/FT)Gas ($/FT)Elec U/G ($/FT)Sewer ($/FT) Gas Utility 40 Median Monthly Residential Bill The median Palo Alto residential bill was 14% lower than PG&E as of January 2018 Gas Utility 41 FY 2020 Projected Cost Changes Supply-Related: $1.3M increase** Gas Operations: $1.0M increase To tal Cost: 15% increase Gas Capital: $3.9M increase Gas Utility * Market-based gas supply, transmission, and environmental costs passed through to customers. ** Projected. Will vary with market prices 42 Drivers of FY 2020 Cost Changes §Resumption of routine gas main replacement capital projects §Crossbore inspection program costs –program to find rare but hazardous condition: gas lines installed through sewer lines via horizontal drilling Gas Utility 43 FY 2020 Revenue at Current Rates 0 5 10 15 20 25 30 35 40 45 50 FY 2019 (projected)FY 2020 (projected) $ (Millions) Distribution Costs Supply-related Costs Distribution Rate Revenue Other Distribution RevenueSupply Revenue Rate Revenue: 9% increase* Distribution Revenue: 85% of distribution costs Distribution Revenue: 81% of distribution costs Gas Utility * Due to distribution rate changes only. Supply rate revenue will vary with market prices. 44 Gas Costs and Revenues by FY Actual Projected 45 Gas Operations Reserve Projections 46 Gas Utility Rate Projections §Rate Design: –One-third of the rate is “supply-related:” gas supply, transmission, and environmental charges. These rates vary monthly according to market-driven costs that are passed directly to customers –Two-thirds of the rate is set based on the City’s costs for maintaining its gas distribution system (gas mains, services, related equipment) §FY 2020 preliminary proposal: –9% customer bill increase due to distribution system rate increases –Supply-related costs will vary with the market and may result in a total customer bill increase that is higher or lower than 9%. §Future projected rate actions –9% for FY 2021 and 7% for FY 2022 (in addition to any supply-related charge variation), inflationary increases thereafter Gas Utility City of Palo Alto (ID # 10216) Finance Committee Staff Report Report Type: Action Items Meeting Date: 4/2/2019 City of Palo Alto Page 1 Summary Title: Discussion with the Finance Committee on FY 2020 Budget Materials Title: Discussion with the Finance Committee on FY 2020 Budget Materials From: City Manager Lead Department: Administrative Services Recommendation As requested by the Finance Committee on March 19, 2019, provide feedback on the upcoming review of the City Manager’s Fiscal Year (FY) 2020 Proposed Operating and Capital Budget and identify any information the Committee may find valuable during this review. Discussion At the March 19, 2019 Finance Committee meeting, the Committee articulated a desire to discuss preparation for the FY 2020 Proposed Budget review in May. This item is agenized for the Committee to discuss questions they may have and materials that they may find helpful as part of the review of the FY 2020 Proposed Budgets. It is anticipated that this discussion will assist the planning of the hearings as well as identify resourced staff can prepare in advance of the hearings.