REPORT TO COUNCIL
SUBJECT
Title
Public Hearing: Consideration and Action on the 2024-2025 DRAFT Annual Action Plan 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.
HUD Timeliness Test
Each year, HUD conducts a timeliness expenditure test for the CDBG program. The purpose of this test is to ensure that grantees are spending funds at a steady pace. For the last two years HUD found that the City had an excess of CDBG funds. Initially this surplus was due to the lingering effects of the COVID-19 pandemic which chilled demand for the Neighborhood Conservation & Improvement Program (NCIP) revolving home repair program. Many NCIP clients were seniors and were reluctant to have contractors working in their home during and immediately following the pandemic. With the dip in demand for the NCIP, the City issued a Notice of Funding Availability (NOFA) in April 2022 and another in February 2023. Together, these NOFAs resulted in the award of more than $2.4 M for six capital improvement projects:
1. Liberty Tower elevator rehabilitation
2. Bill Wilson Center elevator rehabilitation
3. Riverwood Grove Apartments energy efficiency upgrade
4. Silicon Valley Independent Living Center home rehabilitation
5. Boccardo affordable housing rehabilitation
6. San Jose Center for the Blind public facility rehabilitation
To further speed up spending in the coming fiscal year, staff from the Departments of Community Development and Public Works have identified an opportunity to use CDBG funds for a $600,000 ADA curb ramp project in FY24-25. Staff is also exploring an ongoing ADA curb ramp program for subsequent years. Lastly, staff is recommending increases to the NCIP home repair program allocation from $352,000 in FY23-24 to $500,000 in FY24-25 as a result of increased demand in recent months, and will likely recommend further increases in FY25-26 once key positions are filled and the above capital projects are completed.
DISCUSSION
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 estimates 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. HUD typically announces actual allocations to jurisdictions in the spring of each year once the federal budget is finalized. All numbers in the AAP are subject to change prior to the presentation of the final FY24-25 AAP at the second and final public hearing. See Attachment 1 for a summary of the City’s Expected Resources for the FY24-25 DRAFT AAP.
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 to HUD. This meeting is the first of the two required public hearings. Public comment will be included in the final version of the AAP which is scheduled to be presented to the City Council on May 7, 2024. The final version of the AAP will be submitted to HUD on or before May 15, 2024.
Attachment 2, the 2024-2025 DRAFT AAP 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. The Attachment identifies which Public Service Agencies staff recommends be funded to provide services within Santa Clara. Staff recommends that the distribution of public service funding be awarded as the second year of a two-year contract. This year for Capital Improvement Projects staff recommends increasing funding for the NCIP home repair program to meet growing demand and to allocate funding for the construction of new ADA accessible curb ramps to improve sidewalk safety and accessibility for all.
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 City entitlement allocations for FY24-25 are $1,034,553 in CDBG funds and $437,588 in HOME funds which would be the same as the prior year. The proposed allocations also continue to utilize $71,264 from the General Fund, which is part of the Housing Division’s base 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 once the City Council conducts a second public hearing and finalizes the AAP.
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>.
After tonight’s public hearing is complete, there will be further updates and a final version of the AAP will be available for public review and comment 30 days before the second and final public hearing scheduled on May 7, 2024.
The 30-day public comment period for the final version will extend from April 5, 2024 - May 7, 2024. 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 DRAFT AAP
2. Any other Council direction
RECOMMENDATION
Recommendation
1. Approve the 2024-2025 DRAFT AAP and direct staff to include public comments in the final version to be presented to the City Council on May 7, 2024.
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.
Staff
Reviewed by: Reena Brilliot, Acting Director of Community Development
Approved by: Jovan Grogan, City Manager
ATTACHMENTS
1. 2024-2025 DRAFT Annual Action Plan
2. 2024-2025 DRAFT Annual Action Plan Funding Breakdown