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HomeMy WebLinkAbout8.2 Community Development Block Grant Program Review 2 Agenda Item 8.2 Ile STAFF REPORT DUBLIN CITY COUNCIL CALIFORNIA DATE: May 2, 2023 TO: Honorable Mayor and City Councilmembers FROM: Linda Smith, City Manager SU B.ECT: Community Development Block Grant Program Review Prepared by: Jason Earl, Senior ManagementAnalyst EXECUTIVE SUMMARY: The City Council will receive a report on the Community Development Block Grant (CDBG) program and consider becoming an Entitlement City and receiving funding directly from the U.S. Department of Housing and Urban Development (HUD) starting in 2024 or remaining in the Alameda County Urban County program. The City currently receives CDBG funding through the Urban County program administered by Alameda County Housing and Community Development (HCD). The City must notify HUD and the County of its decision by June 12, 2023. STAFF RECOMMENDATION : Direct Staff to either remain in the Alameda County Urban County program or pursue Entitlement City status and notify HUD and Alameda County HCD of the decision. FINANCIAL IMPACT: If the City remains part of the Urban County program, there would not be a change in financial impact. Becoming an Entitlement City is estimated to cost approximately$50,000 for consultant services to plan the program in Fiscal Year 2023-24 and would also include a provision of staff time. Program administration costs, including staffing, would begin in Fiscal Year 2024-25. These costs could be partially offset by the CDBG program which allows 20 percent of the annual funding allocation. DESCRIPTION : Background The Community Development Block Grant (CDBG) program provides annual grants to states, cities, and counties to develop viable urban communities by expanding economic opportunities, principally for low-income and moderate-income persons and providing a suitable housing and living environment. The program is authorized under Title 1 of the Housing and Community Page 1 of 7 412 Development Act of 1974 and is administered by the U.S. Department of Housing and Urban Development (HUD). CDBG funds are allocated to local jurisdictions by HUD using a calculation based on relative levels of pre-1940 housing, poverty, overcrowding, population, and regional growth lag. The City currently receives CDBG funds through the Urban County program administered by the Alameda County Department of Housing and Community Development (HCD). The Urban County program provides an opportunity for cities with a population of less than 50,000 to receive CDBG funds (cities over 50,000 may also choose to receive their CDBG allocation through the Urban County program). Dublin participates in the Urban County program through a Cooperative Agreement with unincorporated Alameda County and the cities of Albany, Emeryville, Newark, and Piedmont. Dublin's participation provides approximately$245,000 in CDBG funds to the Urban County program.A portion of those funds are allocated specifically for Public Service Grants to fund programs in Dublin, a portion is allocated to countywide service programs, and a portion is placed into a pool of funds for Capital Grants that are available to the Urban County jurisdictions on a competitive basis to fund capital improvements. Alameda County handles most of the required program administration, including preparation of the Consolidated Plan,Annual Action Plan, and Citizen Participation Plan. The Consolidated Plan must be prepared every five years, and includes a needs assessment, market analysis, anti-poverty strategy, goals, and projections. The Annual Action Plan is prepared by the County prior to the start of each fiscal year and identifies the goals, projections, and budget for the year. HUD also requires extensive reporting and program monitoring which is handled by the County. This includes year-end and quarterly reporting of data on people served, demographics, etc., administration of financial disbursements to grantees, periodic monitoring of every grantee, and financial reporting on expenditures and balances. Alameda County HCD administers certain CDBG funded programs that benefit all of the Urban County jurisdictions. This includes administering a contract with ECHO Housing to provide tenant/landlord and fair housing services. The County also funds the Minor Home Repair Program administered by Healthy Homes, and a Rental Housing Rehabilitation program that is available to Urban County jurisdictions. Dublin's share of discretionary CDBG funds are distributed through Public Service Grants and Capital Grants. Public Service Grants are awarded through the City's Human Services Grants Program to local non-profit organizations serving Dublin in conformance with program guidelines. These grants are awarded annually by the Dublin City Council after reviewing recommendations made by the Dublin Human Services Commission and includes funding for programs like Meals on Wheels for Dublin's Homebound Seniors. Public Service Grants are limited to 15 percent of the total annual CDBG funding allocation. Historically, Dublin has received more than its share of the 15 percent Public Service Grant allocation by utilizing funds that have gone unused by the other Urban County jurisdictions. For Fiscal Year 2022-2023, Dublin was awarded approximately $85,000 in public services grants. However, the City's allocation for Fiscal Year 2023-24 will be reduced to approximately$45,000. This allocation is lower due to other participants in the Urban Page 2 of 7 413 County program using their full allocation so there are fewer unused funds that Dublin can utilize. The Capital Grant program is administered by Alameda County to provide funding for capital improvements. Organizations apply to the County with the City taking the lead on the application submittal.Approximately$475,000 is available annually to share amongst the Urban County jurisdictions. This includes a $350,000+/- "capital pool"which is available for projects through an RFP program, and approximately$125,000 in previously programmed categories like Rental Housing Rehabilitation and Preservation, and Minor Home Repair. The "capital pool" funds are shared amongst the Urban County jurisdictions and awarded to projects on a competitive basis. The amount of money available for projects in Dublin can vary from year to year. Historically, Dublin's CDBG program efforts have primarily focused on Public Service Grants. However, during the 2020 program review, Staff identified the opportunity for the City to expand its CDBG program by utilizing Capital Grant Funds. Since that time,the City has secured $1,049,130 in capital funds for service organizations as shown in Table 1 below. For example, Dublin was able to obtain $419,130 in Capital Grant funding this fiscal year as part of the Urban County program. This includes $200,000 for Axis Community Health to acquire property for a new facility in Livermore which will serve the greater Tri-Valley area, and $219,130 for the School of Imagination to expand their parking lot and increase their program enrollment in Dublin. This funding level is more than the $350,000 capital grant budget due to carryover of prior year unspent capital funds. Table 1 below provides the capital grant funding amounts that Dublin received over the last 10 years. Table 1. Capital Grant Funding FY 2013-14 through FY2022-23 None FY2013-14 $ - None FY2014-15 $ - None FY2015-16 $ - None FY2016-17 $ - None FY2017-18 $ - None FY2018-19 $ - None FY2019-20 $ - Open Heart Kitchen FY2020-21 $ 330,000 Open Heart Kitchen FY2021-22 $ 300,000 Axis Community Health FY2022-23 $ 200,000 School of Imagination FY2022-23 $ 219,130 Total $ 1,049,130 The City is required to act every three years to stay in the Urban County program or become an Entitlement City. The City first became eligible to participate as an Entitlement City in 2014 when the population reached 50,000. The City Council decided in 2014, 2017, and 2020 to remain in the Urban County program. The City must again decide to either: 1) remain in the Urban County program and enter into a new three-year Cooperative Agreement; or 2) become an Entitlement City and initiate the process to establish that program. The City must inform HUD and Alameda Page 3 of 7 414 County HCD of its decision by June 12, 2023. Analysis The City of Dublin has the option to become an Entitlement City and receive CDBG funds directly from HUD and to take over administration of the CDBG program beginning in 2024 or to remain part of the Urban County program. Table 3 below provides a comparison of the CDBG components for Dublin under the current Urban County program and as an Entitlement City.All dollar amounts are based on Fiscal Year 2022-2023 funding and by estimated Entitlement City figures provided by HUD. Table 2.Urban County&Entitlement City Program Matrix Program Component Urban County Program Entitlement City(Estimated) (FY 2024/2025) CDBG Annual Allocation $245,000 (estimated portion of Urban $245,000 +/-(estimated total amount that (Allocated to programs noted County funds attributable to Dublin's would be available to Dublin in year 1 of below) participation in the program. These the program) funds are not the exclusive use of Dublin nor are they a cap on annual funding available to Dublin based programs and services) Public Service Grants (To $36,750 (Note: Can utilize unused $36,750 (estimated total amount based non-profit service providers and Urban County funds to increase this on the above number) limited to 15% max. of annual amount. For example, Dublin awarded allocation) $85,000 in FY 2022/23 by accessing unused funds from other Urban County jurisdictions) Capital Grants (To non-profit Portion of$350,000 Urban County $159,250 total to be allocated by Dublin organizations for capital pool awarded by County(Recent through RFP (Unused funds can be improvements) examples include: Axis Health $200K carried over into future years with certain facility acquisition funding, School of limitations) Imagination $219K parking lot expansion funding) Economic Development (Job Amount varies per year and Amount varies per year and determined creation for small, low income determined by program administration by program administration and funded owned or operated businesses) and funded from the annual CDBG from the annual CDBG allocation based allocation based on program priorities, on program priorities. Tenant-Based Rental This program is administered directly CDBG can be used for related support Assistance (Emergency through the Urban County. services outside of 15% services cap. housing funds available partly HOME funds are used to provide from CDBG program, and partly financial assistance. HOME) Page 4 of 7 415 HOME Funds (rental Share of$585,000 pool awarded on $75,000 (program administered by City, assistance, down payment competitive basis to organizations but funds continue to be administered by assistance, homebuyer serving Urban County jurisdictions. HCD) counseling, affordable housing production) HUD 108 Loans (For Capital Available only in partnership with an Up to 5x CDBG allocation (total Projects or Programs as 20- Entitlement City(example:Axis Health cumulative balance of all outstanding year, low interest loan) and the City of Livermore which is an HUD 108 Loans cannot exceed this Entitlement City) amount) Program Administration (20% $6,600 to Dublin; and $42,400 to $49,000 to Dublin max. of annual allocation to Alameda County cover program administration, and preparation of Consolidated Plan,Annual Action Plan, Citizen Participation Plan) Consolidated Plan Prepared every 5 years by County with Prepared every 5 years by the City staff input(costs offset by Program (estimated cost: $50,000) Administration funds) Annual Action Plan and Prepared annually by County with staff Prepared annually by City(costs offset Citizen Participation Plan input(costs offset by Program by Program Administration funds) Administration funds) Monitoring and Reporting to Prepared annually by the County Prepared annually by the City HUD Comparable/Nearby Entitlement Cities Table 3 below provides the CDBG allocation for FY2022-23 for comparable and nearby Entitlement Cities. Table 3. Comparable Entitlement City Annual Allocations ' : Walnut Creek(Contra Costa County) 69,700 $ 357,700 Pleasanton (Alameda County) 78,250 $ 338,800 Milpitas (Santa Clara County) 79,000 $ 648,000 Livermore (Alameda County) 86,800 $ 334,200 Dublin (Alameda County) 71,700 $ 245,000 *Entitlement City figures for Dublin estimated based on information provided by HUD. Census Data from US Census Bureau The cities of San Ramon (population 86,000) and Brentwood (population 65,000) are examples similar in size and demographics to the City of Dublin that are not Entitlement Cities and are not currently planning to change their status. Page 5 of 7 416 As an example of how CDBG funds can be spent by category,Table 4 below shows how the cities of Livermore and Pleasanton propose spending their annual CDBG allocations as Entitlement Cities in FY2022-23. Table 4. Livermore and Pleasanton CDBG Allocation by Category FY2022-23 . . Capital Grants HUD Section 108 Loan Repayment (for Axis Community Health Clinic) $ 28,425 $ 24,749 Axis Community Health New Service Dental Site $ - $ 195,483 Tri-Valley Haven - Rental Assistance $ 47,905 Abode Services- Rapid Re-Housing $ 32,184 Hagemann Farm Loan Repayment $ 91,445 Public Service Grants Open Heart Kitchen $ 22,023 $ 25,965 Spectrum Community Services $ 35,521 $ 24,857 Administration $ 76,725 $ 67,763 Total $ 334,228 $ 338,817 Urban County Program Over the last three years the City of Dublin has benefitted from being the Urban County program and having use of Capital Grants from the Urban County Pool while also using more than our share of the funds from the pool of Urban County Public Service Grants. If Dublin were to remain in the Urban County program,there would continue to be opportunities for the City to seek unused funds from both pools of money to fund programs in Dublin using CDBG funds. The City could also potentially utilize CDBG Economic Development funds for job creation/retention activities including establishment, stabilization and expansion of small businesses if they are either owned by low-income people or employ low-income workers. Entitlement City Becoming an Entitlement City would provide the City with greater control over CDBG program administration and certainty regarding annual Capital Grant funding. However, it could also reduce the maximum amount of potential Capital Grant and Public Service Grant funding available each year because the City could no longer utilize unused funds in the Urban County pool. The change in control would also result in additional work to administer the program including the upfront consultant time and cost to plan the program. Staff believes significant additional staff time would be necessary to manage the CDBG start up and ongoing program administration. This would either come in the form of redeployed staff resources or staff augmentation through a consultant. ENVIRONMENTAL REVIEW This information report is not subject to the requirements of the California Environmental Quality Act (CEQA), pursuant to CEQA Guidelines Section 15378 as it does not meet CEQA's definition of a Page 6 of 7 417 project and will not result in direct or indirect physical changes in the environment. STRATEGIC PLAN INITIATIVE: None. NOTICING REQUIREMENTS/PUBLIC OUTREACH : The City Council Agenda was posted. ATTACHMENTS: None. Page 7 of 7 418 I ' :' ' , r II e . 4 . r CDBG Program • Provides annual grants to states, cities and counties • Purpose: To develop/enhance viable urban communities, provide decent housing, and expand economic opportunities for low-income people • Entitlement Cities: Receive CDBG funds directly from HUD • Urban County Program — Provides CDBG funds to cities with population <50,000 — Cities >50,000 may remain in program 420 Urban County Program • Dublin currently participates in Urban County Program — Cooperative Agreement with Urban County jurisdictions • Program administered by Alameda County HCD • Dublin's discretionary funds — Public Service Grants: Awarded through Dublin's Human Service's Grants Program — Capital Grants: Awarded by County 421 Current Consideration • Stay in Urban County Program or become Entitlement City beginning in FY2024-25 • Inform HUD and HCD by June 12, 2023 • Required program preparation and implementation for Entitlement status would then begin Program Components • Public Service Grants (CDBG ) • Capital Grants (CDBG ) • Economic Development (CDBG) • Administration (CDBG ) • HOME Funds • Tenant- Based Rental Assistance • HUD 108 Loans Urban County vs . Entitlement City • Become an Entitlement City — Upside: Greater control over program administration and certainty regarding Capital Grant funding — Downside: Increased program administration and could reduce potential Capital and Public Service Grant funding • Remain in Urban County Program — Option : Expand Dublin program to further utilize funding for Economic Development 424 Questions