REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: FY 2019/2020 Draft Annual Action Plan for the use of Federal Housing and Urban Development Grant Funds
Report
BACKGROUND
The City of Santa Clara receives annual funding from the United States Department of Housing and Urban Development (HUD) in the form of Community Development Block Grant (CDBG) and Home Investment Partnerships Program (HOME) funds. CDBG funds are used to provide public services to Santa Clara’s low-income residents and funding for capital improvement projects. HOME funds are used for the development of affordable housing options.
As an entitlement agency, the City is required to develop a Five-Year Consolidated Plan (ConPlan) that identifies goals and needs within the community that could be addressed through the use of HUD funding. The City is also required each year to prepare an Annual Action Plan (AAP) to document how the City will use HUD funding consistent with the goals and needs identified in the ConPlan. Both documents must be reviewed and approved by HUD in order for the City to receive annual HUD fund allocations.
HUD requires that the public be provided two opportunities to offer input on the development of the AAP; once during the development of the draft AAP, and once prior to submission of the final version of the AAP to HUD for review. This hearing satisfies the first public hearing requirement. The final version of the AAP will be presented to City Council for consideration on May 7, 2019 so that it can be submitted to HUD prior to the May 15 deadline.
DISCUSSION
Because HUD has not yet announced allocation amounts for the 2019/2020 program year, the Draft Annual Action Plan uses an estimated allocation conservatively based on a 5 percent reduction from last year’s allocation. HUD typically will announce actual allocations before May 7, 2019 so that the Annual Action Plan can be updated before the final version is presented to the City Council.
Based on the estimated allocations combined with a carryover of funds from the prior year, the Community Development Department is anticipating a total availability of $1,383,759 of CDBG funds and $942,358 of HOME funds for FY 2019/2020. The following table breaks down the available federal resources:
|
RESOURCES |
FY 19/20 Estimated Entitlement |
Prior Year Balance |
Estimated Program Income CDBG FY19/20 HOME FY18/19 |
FY19/20 Total Expected Resources |
|
CDBG funds |
$920,486 |
$106,273 |
$357,000 |
$1,383,759 |
|
HOME funds |
$422,358 |
$370,000 |
$150,000 |
$942,358 |
A portion (15 percent) of the HOME funds are reserved by HUD for distribution to a Community Housing Development Organization (CHDO). A CHDO is defined as a private, non-profit, community-based, service organization that develops affordable housing in the local community. HUD procedures allow a set percentage of both HOME and CDBG funds to be allocated by the local jurisdiction for administrative costs.
Attachment A (“Funding Proposals Summary”) details how the proposed distribution of estimated HUD funds and local funds to provide public services and support affordable housing options. The Public Service Agencies identified in the proposed distribution are currently under a 2-year contract with the City to provide such services. Fiscal Year 2019/2020 will be the second year of the contract. Note that previously the City made the decision to provide funding for one of the Public Service Agencies using the General Fund as the total requested by Public Service Agencies exceeded the amount of HUD funds available for distribution.
HUD requires local jurisdictions to include contingency language in the Annual Action Plan to address differences between the estimated amounts and the final allocation amounts. The draft Annual Action Plan includes the following contingency provisions that align with the ConPlan goals.
Contingency Provision for CDBG:
1. If the total of HUD’s allocation and the FY 2018/2019 program income is over $100,000 more than what is estimated, $15,000 will be used to fund the one agency that is proposed to be funded with General Fund dollars; thus, freeing up those General Fund dollars. Any balance above $100,000 will be used to fund the Neighborhood Conservation & Improvement Program (NCIP).
2. If the total of HUD’s allocation and the FY 2018/2019 program income is less than $100,000, but more than what is estimated, the excess funds will be used to fund NCIP.
3. If the total of HUD’s allocation is less than the estimated amount, funding for the NCIP program would be reduced. If the decrease should result in the lowering of the Public Service Cap, negotiations would occur with the public service agencies to determine which agency(ies) would have their funding reduced.
4. One public service agency is proposed to be funded with City General Funds in the amount of $15,000. If General Funds are not approved in the City’s budget process, funding for all programs and agencies will be reassessed and funded in accordance to the Public Service Cap. If this Action Plan is approved by HUD prior to the approval of general funds, an amendment to the Annual Action Plan will be completed.
Contingency Provision for HOME:
1. If the total of HUD’s allocation is more than the estimated amount, the difference - after the CHDO set-aside and Program Administration are recalculated - will go to fund the Tenant Based Rental Assistant (TBRA) program.
2. If the total of HUD’s allocation is less than the estimated amount, the difference - after the CHDO set-aside and Program Administration are recalculated - will reduce funding for TBRA.
Staff is recommending that the City Council direct staff to publish the 2019/2020 Draft Annual Action Plan for 30 days to receive public comment.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The estimated entitlement amounts for FY 2019/2020 are $1,383,759 in CDBG resources and $942,358 in HOME funds. This proposed allocation of the City’s available CDBG and HOME grant and program income funds would be used to support the goals set forth in the City’s Consolidated Plan.
In addition, the FY 2019/2020 Recommended Operating Budget will include a $15,000 one-time General Fund allocation to fund one of the Public Service Agencies as the total requested by Public Service Agencies exceeded the amount of HUD funds available for distribution.
The combined (CDBG and HOME) FY 2019/2020 federal entitlement grants and a one-time General Fund allocation are assumed in the development of the upcoming FY 2019/2020 and 2020/2021 Biennial Budget.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
Preparation of the draft AAP follows a procedure determined by HUD and has included two public hearings to identify community needs and objectives, and to review priorities for the City’s HUD funding allocations. The first public hearing is the March 26, 2019 Council Meeting, and the second will be the May 7, 2019 City Council meeting. Comments made at the two public hearings will be noted in the final AAP.
The AAP will also be made available for public review and comment for a 30 day period. Noticing of the 30-day public comment period will be published on March 6, 2019 in The Santa Clara Weekly. The draft AAP will also made available on the City’s website, and at public locations including the City Clerk’s Office, the Housing and Community Services Division, and City libraries. Notification of the availability of the draft AAP will also emailed to interested parties which include local nonprofit agencies.
ALTERNATIVES
1. Approve the 2019/2020 Draft Annual Action Plan, and direct staff to incorporate all public comments into the final version, which shall be presented to City Council on May 7, 2019.
2. Any other Council direction.
RECOMMENDATION
Recommendation
Approve the FY 2019/2020 Draft Annual Action Plan, and direct staff to incorporate all public comments into the final version, which shall be presented to City Council on May 7, 2019.
Staff
Reviewed by: Andrew Crabtree, Director of Community Development
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Attachment A (“Funding Proposals Summary”)
2. 2019 Annual Action Plan (FY 2019/2020) DRAFT