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PUBLIC HEARING: 2018-2019 ANNUAL ACTION PLAN FOR THE COMMUNITY DEVELOPMENT BLOCK GRANT, HOME INVESTMENT PARTNERSHIPS, AND EMERGENCY SOLUTION GRANT PROGRAMS
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving the 2018-2019 Annual Action Plan with any modifications deemed appropriate by the Council; and
2. Authorizing the City Manager, or his designee, to execute all documents and forward them to the U.S. Department of Housing and Urban Development and to take actions necessary and appropriate to carry out the purpose and intent of the resolution.
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Summary
The U.S. Department of Housing and Urban Development (HUD) requires that jurisdictions prepare a one-year Annual Action Plan (Action Plan) (Exhibit 1 to the Resolution), to receive Community Development Block Grant (CDBG), Home Investment Partnerships (HOME), and Emergency Solutions Grant (ESG) funding. The Action Plan identifies the specific projects (Exhibit 2 to the Resolution) that will be funded during the year to help accomplish the goals established in the five-year Consolidated Plan. The Community Development Committee (CDC) was asked to recommend organizations that would receive these funds as a part of its annual process of allocating CDBG funds to community based organizations. The Action Plan also serves as a portion of the Housing Division’s budget, and is typically submitted in May; however, due to delays at the federal level, it must be submitted to HUD by June 30, 2018.
DISCUSSION
Background
To receive certain federal funds, including CDBG, HOME, and ESG, HUD requires jurisdictions to prepare a one-year Annual Action Plan. The Action Plan identifies the specific projects and activities that will be funded during that year to help accomplish the goals established in the five-year Consolidated Plan which the Council adopted in April 2015. The Action Plan contains funding recommendations for the use of CDBG, HOME, and ESG funds for the upcoming program year, including the funding recommendations proposed by the CDC, which is an advisory body to the City Council.
Allocations under each program are as follows:
|
|
Program Year 2016-2017 |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
% Difference from 2017-18 to 2018-19 |
|
CDBG |
$3,143,802 |
$3,225,590 |
$3,451,760 |
$226,170 |
7% |
|
HOME |
$1,151,969 |
$1,190,818 |
$1,759,186 |
$568,368 |
48% |
|
ESG |
$291,273 |
$283,028 |
$290,376 |
$7,348 |
3% |
|
TOTAL |
$4,587,044 |
$4,699,436 |
$5,501,322 |
$801,886 |
17% |
Community Input and Funding Process
The process of developing the Action Plan began in November 2017 with the placement of a public notice in The Record notifying the public of a CDC meeting to discuss community needs and the start of the application period for CDBG and ESG funds. HOME funds will be allocated to projects through a separate process. Notices were also sent to approximately 50 agencies, organizations, interested citizens, and posted on the City’s website.
The deadline for submitting CDBG and ESG applications was January 12, 2018. All complete applications for eligible uses were reviewed by the CDC. The CDC held three public meetings to review the applications and discuss the Action Plan.
Public notices regarding the availability of the draft Action Plan were published in The Record and posted on the City’s website. The public notice began a 30-day review period for these documents. At the time of the preparation of this staff report, no comments had been received.
Present Situation
2018-2019 ACTION PLAN
The following is an overview of each of the funding sources and a summary of recommended funding for each program:
Community Development Block Grant Program
CDBG is a flexible program that provides communities funding to address a wide range of unique community development needs that benefit low-income residents. Cities with more than 50,000 people and counties with a population of more than 200,000 are eligible to receive this funding from the federal government. Each year HUD determines the CDBG allocation using a formula that takes into account total population, the number of persons in poverty, housing overcrowding, and the age of the housing within the jurisdiction.
CDBG funds can be used for a wide range of activities, including:
• Rehabilitation of residential and commercial property
• Demolition
• Public facilities and improvements
• Economic development
• Public services
The primary eligibility requirement for each activity is that it must benefit low- and moderate-income persons. HUD defines low-and-moderate-income as a household that is at or below 80 percent of the area median income (AMI), which in Stockton is an annual income of $50,950 for a family of four.
Activities that are generally ineligible include assistance for buildings or portions of buildings used for the conduct of government; general local government operating and maintenance expenses; partisan political purposes, including voter registration; equipment purchases; and new housing construction.
The following is a summary of the activities recommended for funding for the 2018-2019 Program Year:
CDBG Program Delivery Costs
This category includes Administration, which are the costs associated with daily operations, such as staff costs to administer the program, materials/supplies, training, and consultant services. The City is allowed to use up to 20 percent of its entitlement and program income for this purpose, which has increased this year due to repayment of a loan from the Successor Agency. Program Delivery includes staff costs attributed directly to projects as well as project delivery costs, such as obtaining title reports and appraisals.
|
Program Delivery Costs |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
Administration/Oversight |
$852,801 |
$1,078,866 |
$226,065 |
27% |
|
Program Delivery |
$281,414 |
$300,000 |
$18,586 |
7% |
Housing Programs
The Emergency Repair Program is designed to provide assistance to low-income homeowners to address emergency problems which represent an immediate health and safety danger to the occupants. The Housing Loan Pool provides funds for the City’s housing rehabilitation programs, which includes programs to assist low-income homeowners or owners of rental property. The amount of funding available for the Housing Loan Pool program is less for Program Year 2018-2019 due to reduced applications and an increase in Homeless Initiative funds. However, HOME funds are also available for the housing programs. The Emergency Repair loans will continue to be funded out of the CDBG Revolving Loan (RL) fund, which is a separate fund into which CDBG loan repayments are placed, and then reused for new loans. Rehabilitation loans are provided to eligible homeowners on a first come, first served basis. Funding for rental projects will be made available through a Notice of Funding Availability (NOFA) process with funding recommendations brought to the City Council for approval. In 2017-2018, the City created a Homeless Initiative fund to purchase an apartment building that will house formerly homeless individuals. This year the fund will be used to support the homelessness initiatives and/or projects.
|
Housing Programs |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
Emergency Repair Program (RL) |
$65,000 |
$60,000 |
$5,000 |
(8%) |
|
Housing Loan Pool |
$629,542 |
$362,688 |
($266,854) |
(-42%) |
|
Homeless Initiative |
$300,000 |
$435,000 |
$135,000 |
45% |
Subrecipient Assistance
Twelve applications requesting funding were received. The CDC held three public meetings to review the applications and recommended that ten organizations receive funding. Of the ten, two were not recommended to receive the full amount that they requested, which were scalable projects. Approximately $550,000 of CDBG funds were allocated to subrecipients, including $185,745 for San Joaquin Fair Housing, which is a HUD-mandated activity.
Applications were submitted by many qualified and deserving organizations with the total amount of funds requested of $1.2 million. The CDC focused on providing funding for one-time projects, such as public facilities and economic development, and providing funding to activities where the CDBG funds were paying for project costs rather than salaries. Due to the uncertainty of organizations receiving funding on an annual basis, the CDC tries to avoid providing funding for salaries. Funding recommendations are indicated below:
|
CDBG FUNDING: CDC Recommendations Subrecipient Assistance |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
Project Type |
|
Gospel Center Rescue Mission |
$12,000 |
$118,255 |
$106,255 |
885% |
Public Facility (Housing Rehab) |
|
Read to Me Stockton |
$50,000 |
$50,000 |
$0 |
0% |
Public Service (Literacy) |
|
Tuleburg Press |
$35,000 |
$35,000 |
$0 |
0% |
Public Service (Literacy) |
|
Emergency Food Bank |
$35,000 |
$30,000 |
($5,000) |
(-14%) |
Public Service (Food) |
|
Second Harvest Food Bank |
$30,000 |
$30,000 |
$0 |
0% |
Public Service (Food) |
|
Disability Resource Agency (DRAIL) |
$10,000 |
$30,000 |
$20,000 |
200% |
Public Service (ADA Accessibility) |
|
SJC HSA - Meals on Wheels |
$14,000 |
$10,000 |
($4,000) |
(-29%) |
Public Service (Food) |
|
Community Medical Centers, Inc. |
$0 |
$46,000 |
$46,000 |
New Activity |
Public Facility (ADA Accessibility) |
|
Kelly’s Angels Foundation |
$0 |
$15,000 |
$15,000 |
New Activity |
Public Service (Literacy) |
|
San Joaquin Fair Housing |
$176,810 |
$185,745 |
$8,935 |
5% |
Fair Housing |
Attachment A includes a description of all CDBG applications that were received.
Economic Development Program
The City is proposing to fund several programs to assist businesses. These include the Facade Program which provides funds for improvements to the exterior of commercial properties and the Emergency Grant Program which assists businesses by repairing emergency conditions that endanger the health and safety of employees or the general public and for which private funds are not readily available. In addition, the Micro-Business Loan Pool provides funds to assist small businesses to start or expand, and the Entrepreneurship/Business Incubator Program, operated by City staff, provides funding to new and existing small business programs that focus on enhancing services for startup businesses and entrepreneurship programs. The Entrepreneurship/Business Incubator funds will be allocated to specific projects through a NOFA process while funds from the other programs will be allocated on a first come, first served basis.
In July 2015, the City Council approved the new Downtown Infrastructure Infill Program, which provides financial incentives to eligible parties interested in developing market-rate residential, commercial, or mixed-use projects in Downtown Stockton. The City funds this program with CDBG based on RDA loan payback, and the funds are committed upfront. To be eligible, businesses must:
1. Develop a minimum of 35 new market-rate residential units and/or develop a minimum of 30,000 square feet of new, or newly renovated, retail or commercial space;
2. Be located within the program boundary area, which includes Center Street to the west, Park Street to the north, ACE Rail/Union Pacific Railroad to the east, and Washington Street to the south;
3. Make a capital investment of at least $500,000; and
4. Eligible public infrastructure improvements must equal $100,000 or more.
|
Economic Development Programs |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
Facade Program |
$350,000 |
$350,000 |
$0 |
0% |
|
Micro-Business Loan Pool |
$50,000 |
$50,000 |
$0 |
0% |
|
Emergency Grant Program |
$10,000 |
$10,000 |
$0 |
0% |
|
Entrepreneurship/Business Incubator |
$80,000 |
$80,000 |
$0 |
0% |
|
Fresh Produce Access Grant |
$40,000 |
$0 |
($40,000) |
(100%) |
|
Downtown Infrastructure Infill Incentive Program |
$0 |
$900,000 |
$900,000 |
New Activity |
|
Oak Park Ice Arena Improvements |
$0 |
$600,000 |
$600,000 |
New Activity |
Debt Service
The City has received two Federal Section 108 loans totaling $25.5 million. Future CDBG entitlements and/or program income were pledged as repayment sources for the loans. Loan repayment began in 2002 and will extend through 2024. Projects partially funded with the Section 108 loans include Dean DeCarli Waterfront Square, the Cineplex, the Stockton Marina, Joan Darrah Promenade, Morelli Boat Launch, Bob Hope (Fox) Theatre, and Gleason Park Apartments.
|
Debt Service |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
Debt Service - Section 108 Loan |
$1,918,659 |
$1,941,928 |
$23,269 |
1.2% |
HOME Investment Partnership Program
HOME funds must be used by local governments to create affordable housing for low- and moderate-income households. HOME funds are awarded annually as formula grants to participating jurisdictions. The program allows State and local governments to use HOME funds for grants, direct loans, loan guarantees or other forms of credit enhancement. The incomes of a household receiving HOME funds must not exceed 80 percent of AMI.
HOME funds can be used for four primary types of activities: homebuyer programs, homeowner rehabilitation programs, rental housing programs, and tenant-based rental assistance.
HOME Administration/Loan Fund
Administration includes the general costs associated with the administration and oversight of the HOME program. A jurisdiction may spend up to ten percent of its entitlement and program income on administrative costs. Housing Program Delivery includes costs attributed to specific housing projects.
The Loan Fund sets aside HOME funds which are available for projects throughout the year. The City’s rehabilitation and down payment assistance programs, as well as loans for multi-family developments, are funded from this pool. The Loan Fund has been reduced for 2017-2018 due to a reduction of Reprogrammed Funds from the prior year. In 2017, the City issued a NOFA for housing funds which resulted in four projects receiving HOME funding. The allocation of funds to these projects reduced the amount of uncommitted funds that are currently being reprogrammed through the 2018-2019 budget. The 2018-2019 HOME Loan Fund will also be allocated through a NOFA process with funding recommendations brought to Council for final approval.
|
HOME Administration |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
HOME Administration |
$144,082 |
$195,919 |
$51,837 |
36% |
|
Housing Program Delivery |
$114,582 |
$114,582 |
$0 |
0% |
|
Loan Fund |
$1,213,664 |
$1,384,807 |
$171,143 |
14% |
Community Housing Development Organizations Project Assistance
HUD regulations require that 15 percent of the City’s HOME allocation be reserved for affordable housing projects undertaken by Community Housing Development Organizations (CHDO), which are community-based organizations that develop affordable housing. Currently, Visionary Home Builders and STAND are the City’s certified CHDO. HUD has established requirements for CHDO certification, and the City utilizes a checklist to ensure that all the requirements are met before certifying an organization as a CHDO.
|
CHDO Assistance Program |
Program Year 2017-2018 |
Program Year 2018-2019 |
Difference: 2017-2018 to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
CHDO Set Aside (New Allocation) |
$178,623 |
$263,878 |
$85,255 |
48% |
Emergency Solutions Grant Program
ESG provides funding to emergency shelters, homeless service providers, and for homeless prevention and rehousing programs. Eligible activities are street outreach, emergency shelters, homelessness prevention, and rehousing assistance. Funds may also be used to provide the required Homeless Management Information System (HMIS) and for administrative activities. The emphasis of the ESG program is to assist people to regain stability in permanent housing after experiencing a housing crisis and/or homelessness; therefore, HUD limits the amount of a jurisdiction’s ESG grant that can be used for assistance to emergency shelters to not more than 60 percent.
In 2017-2018, the City received an “extra” one-time ESG allocation from HUD in the amount of $607,521. City Council approved the allocation of these extra ESG funds in August 2017.
The CDC reviewed the six applications that were received requesting ESG funds. The CDC’s recommendations are shown below. The ESG funds are generally allocated using a formula based on the number of beds at each shelter, except for St. Mary’s, which is not a shelter, and Stockton Shelter, which has many more beds than the other shelters.
|
ESG Funding |
Program Year 2017-2018 Base Allocation |
Program Year 2017-2018 with “Extra” |
Program Year 2018-2019 |
Difference: 2017-2018 Base to 2018-2019 |
Percentage: 2017-2018 to 2018-2019 |
|
Emergency Shelter |
|
|
|
|
|
|
Gospel Center Rescue Mission |
$24,292 |
$75,575 |
$24,950 |
$658 |
3% |
|
Haven of Peace |
$20,435 |
$63,574 |
$20,955 |
$520 |
3% |
|
St. Mary's |
$44,776 |
$139,300 |
$45,950 |
$1,174 |
3% |
|
Stockton Shelter |
$53,268 |
$165,721 |
$54,650 |
$1,382 |
3% |
|
Women's Center-Youth & Family Services |
$27,042 |
$84,130 |
$27,750 |
$708 |
3% |
|
Subtotal |
$169,813 |
$528,299 |
$174,255 |
$4,442 |
3% |
|
|
|
|
|
|
|
|
Other Activities |
|
|
|
|
|
|
CVLIHC - Homelessness Prevention/Rapid Re-Housing |
$103,498 |
$322,249 |
$106,150 |
$2,652 |
3% |
|
Administration |
$9,717 |
$40,000 |
$9,971 |
$254 |
3% |
|
TOTAL ESG FUNDING |
$283,028 |
$890,548 |
$290,376 |
$7,348 |
3% |
Notification
In conformance with HUD’s requirements and the City’s Citizen Participation Plan, a summary of the Action Plan and a notice of the public hearing were printed in The Record on May 17, 2018. Also, each organization applying, has been notified in writing of the CDC’s recommendation and of the date and time of this public hearing. A copy of the draft Action Plan and the draft Citizen Participation Plan were also posted on the City’s website.
FINANCIAL SUMMARY
The Action Plan includes actual appropriations for the Economic Development Department - Housing Division’s 2018-19 budget. These appropriations are dependent upon the receipt of funds from the HUD.
Attachment A - Applications Received