REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Consideration of the 2024-2025 Annual Action Plan (FINAL) and the 2021-2022 Annual Action Plan Substantial Amendment for the Use of Federal Housing and Urban Development Grant Funds
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
As an entitlement agency, 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.
HUD requires that every five years the City, as an entitlement agency, prepare a Five-Year Consolidated Plan (ConPlan) which identifies goals and needs within the community that could be addressed through the use of HUD funding. The City’s current ConPlan was prepared in 2020. HUD also requires that the City each year submit an Annual Action Plan (AAP). The AAP details how CDBG and HOME allocations will be used by the City to address the goals and needs identified in the City’s ConPlan. The 2024-2025 AAP covers the final year of the 2020-2025 ConPlan cycle.
24/25 Annual Action Plan (FINAL)
HUD requires that the public be provided two opportunities to offer input on the development of the City’s Annual Action Plan; once during the development/drafting phase of the Annual Action Plan, and once prior to submission of the final version to HUD. This is the second of two public hearings. Public comment will be included in the final version and will be submitted to HUD for approval on or before May 16, 2024.
21/22 Annual Action Plan Substantial Amendment
When proposing significant changes to a previously approved Annual Action Plan, the City must complete a Substantial Amendment. The public must be given at least a 30-day Review Period to provide comment on the Substantial Amendment and its proposed changes. The Review Period began on April 5, 2024, and the Substantial Amendment will be presented at the May 7, 2024 City Council Meeting.
DISCUSSION
2024-2025 Annual Action Plan (FINAL)
The FY24-25 AAP is a one-year Plan that details how HUD funds will be spent on projects and activities to address goals and needs identified in the ConPlan. In addition to the anticipated annual allocation, the AAP also identifies use for funds that carryover from the prior year and funds that come to the City as Program Income (PI) as loans made by the City in the past are paid back. The carryover amount is based upon estimations of current activities that may not fully draw down funds that have been committed in the FY23-24 AAP. The PI amount is based upon estimates of which NCIP loans may be paid off during the FY24-25.
Revisions from the First Draft of the Annual Action Plan:
HUD’s final allocation has not yet been released, and staff learned after the first public hearing that there is likely to be an across the board reduction for HUD programs. To be conservative, staff has reduced the CDBG and HOME entitlements in this updated Annual Action Plan by 13% and 16%, respectively. In addition, the Health Trust recently informed the City that they will no longer administer the Meals and Wheels program effective June 30, 2024. For this reason, staff removed this program from the first draft of the Annual Action Plan. Since that time staff has learned that Loaves and Fishes will be taking over the program starting in July 2024 and that the City can continue to fund the program. In this revised Annual Action Plan, staff has restored funds that were allocated for the Meals on Wheels program and reduced the funding allocation to the other CDBG sub-recipients from $38,000 to $31,600. Staff has also adjusted the Project Sentinel amount from $51,264 to $67,803 to correct an error in the first draft. The corrected amount is the same as what was funded in the prior year. Staff has also adjusted the contingency language in section AP-15. See Attachment 1 for the full and revised version of the FY24-25 Annual Action Plan with marked changes.
Attachment 2, the 2024-2025 Annual Action Funding Breakdown, details which programs and activities will be funded with HUD funds, and which will be funded with local funds, including housing related Special Revenue Funds and the City’s General Fund, to benefit Santa Clara’s low-income population. This breakdown has been revised to reflect the above adjustments.
This year for Capital Improvement Projects, staff recommends allocating funding for the construction of new ADA accessible curb ramps to improve sidewalk safety and accessibility for all.
21/22 AAP Substantial Amendment
HUD requires entitlement jurisdictions who receive HOME funds to set aside a portion of funds each year for Community Housing Development Organizations or CHDOs. CHDOs are a special type of nonprofit organization that has capacity to serve as the owner or sponsor of an affordable housing project and that has met certain HUD requirements. The City has not committed its CHDO funds because CHDO administration is labor intensive for a relatively small amount of funding and there are few agencies who are willing to serve as CHDOs.
Jurisdictions must hold onto CHDO set aside funds for two years before they can reprogram them for other HOME eligible uses under current HUD regulations. The 21/22 AAP had set aside $66,451.65 for CHDO purposes. The City can now reprogram these CHDO set-aside funds and staff recommends allocating them for use in the Tenant Based Rental Assistance Program (TBRA).
Attachment 3 highlights the changes to the 2021-2022 Annual Action Plan that are proposed by this substantial amendment.
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 revised estimated City entitlement allocations for FY24-25 are $899,653 in CDBG funds and $364,642 in HOME funds; a notable decrease from prior year funding amounts of $1,034,553 and $437,588, respectively. The anticipated funding reduction is due to changes in the federal budget. The proposed allocations also include $87,803 in General Fund funding, which is appropriated annually in the Community Development Department’s operating budget. Budget actions to appropriate funding associated with the FY24-25 AAP will be brought forward for City Council approval later this year once HUD finalizes its allocation and any necessary updates are made to the AAP.
The Substantial Amendment will not have a fiscal impact as it is simply a reprogramming of funds.
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>.
The 30-day public comment period for the final version began on April 5, 2024 - and is extended through tonight’s hearing. The final AAP will be made available on the City’s website, and at public locations including the City Clerk’s Office, and the Housing and Community Services Division. Notification of the availability of the Draft AAP was also emailed to interested parties which include local nonprofit agencies.
ALTERNATIVES
1. Approve the 2024-2025 Annual Action Plan (FINAL)
2. Approve the 2021-2022 Annual Action Plan Substantial Amendment
3. Any other Council direction
RECOMMENDATION
Recommendation
1. Approve the 2024-2025 Annual Action Plan 5-7-24 Revision (FINAL) and direct staff to include any public comments received.
2. Delegate authority to the City Manager or designee to execute all agreements and amendments that exceed the City’s $250,000 threshold for federal and local funding that is allocated through the City Council’s adoption of the 2024-2025 Annual Action Plan in final forms approved by the City Attorney.
3. Approve the 2021-2022 Annual Action Plan Substantial Amendment to repurpose CHDO funds for Tenant Based Rental Assistance.
...Staff
Reviewed by: Reena Brilliot, Acting Director of Community Development
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. 2024-2025 Annual Action Plan 5-7-24 Revision (FINAL)
2. 2024-2025 Annual Action Plan Funding Breakdown
3. 2021-2022 Annual Action Plan Substantial Amendment