Item 7.1
Revised 10/17/23
CITY COUNCIL
STAFF REPORT
CITY OF
CHULA VISTA
October 17, 2023
ITEM TITLE
HUD Entitlement Grants and Appropriation: Adopt a First Amendment to the U.S. Department of Housing and Urban Development Fiscal Year 2023/24 Annual Action Plan and Appropriate Funds Report Number: 23-0245
Location: 333 Oxford Street
Department: Housing & Homeless Services
Environmental Notice: The Project qualifies for a Categorical Exemption pursuant to the California Environmental Quality Act State Guidelines Section 15301 Class 1 (Existing Facilities), Section 15302 Class 2 (Replacement or Reconstruction), and Section 15303 Class 3 (New Construction or Conversion of Small Structures). Pursuant to Title 24, Part 58.35(a) (3)(iii) of the Code of Federal Regulations and Housing and Urban Development Environmental Guidelines, the activity is Categorically excluded under National Environmental Policy Act.
Recommended Action
Adopt a resolution approving the First Amendment to the U.S. Department of Housing and Urban Development Annual Action Plan to (1) allocate HOME Investment Partnerships Program Funds to affordable housing production, (2) transfer HOME - American Rescue Plan funds for administration, (3) allocate Community Development Block Grant Funds for the renovation of facilities and infrastructure at Lauderbach Park, (43) authorize the City Manager or her designee to negotiate and execute documents consistent with the proposed activities, and (54) appropriate funds for that purpose (4/5 Vote Required).
SUMMARY
The City of Chula Vista's Annual Action Plan is a document required annually by the U.S. Department of Housing and Urban Development to describe the funding strategy for use of various entitlement funds. Any significant funding changes to the approved Action Plan constitute a Substantial Amendment and must be approved by City Council.
This Resolution would amend the 2023-24 Annual Action Plan to transfer administrative funds in the HOME - American Rescue Plan grant, and allocate HOME Investment Partnerships Program funds for affordable housing production, and allocate Community Development Block Grant funds for a second phase of improvements at bauderbach Park, located at 333 Oxford Street. v.003 Page 1
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the proposed Action Plan Substantial Amendment does not constitute a project under Section 15378 of the California Environmental Quality Act ("CEQA") State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required. Pursuant to Title 24, Part 58.34(a)(2)&(3) of the Code of Federal Regulations and HUD Environmental Guidelines, the activity is exempt under the National Environmental Policy Act (NEPA).
The Director further finds that the Lauderbach Park improvements project qualifies for a Categorical Exemption pursuant to State CEQA Guidelines Section 15301 Class 1 (Existing Facilities), Section 15302 Class z (Replacement or Reconstruction), and Section 15303 class 3 (New Construction or Conversion of Smal Structures) because the proposed actions would not result in a significant effect on the environment, create a cumulative impact, damage a scenic highway, or cause a substantial adverse change in the significance of a historical resource. Thus, no further environmental review is required. Pursuant to Title 24, Part
58.35(a)(3)(iii) of the Code of Federal Regulations and Housing and Urban Development Environmentat Guidelines, the activity is Categorically excluded under National Environmental Policy Act.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
As a U.S. Department of Housing and Urban Development (HUD") entitlement community, the City receives annual funds through three block grant programs: HOME Investment Partnerships Program ("HOME"), Community Development Block Grant ("CDBG"), and Emergency Solutions Grant ("ESG"). Due to the pandemic, a fourth grant was received and appropriated via City Council Resolution No. 2023-012 adopted on February 14, 2023, for HOME - American Rescue Plan ("HOME-ARP") funds. In connection with the programs, the City must adopt and follow a five-year Consolidated Plan and an annual Action Plan for the activities and disbursement of funds. The 2023-24 Action Plan was adopted by Council on May 9, 2023, pursuant to City Council Resolution No. 2023-045, and submitted to HUD shortly thereafter. It was approved by HUD on September 14, 2023. Tonight's action would serve as a First Amendment to the 2023-24 Action Plan to add the activities described below.
HOME - ARP Transfer
In February 2023 Council appropriated $3,139,777 in HOME - ARP funds for the production of Permanent Supportive Housing ("PSH") and grant administration, pursuant to the HOME-ARP Allocation Plan. The City now wishes to split these funds such that $2,668,810.45 is targeted for the production of PSH and $470,966.55 is reserved for grant administration costs, in accordance with federal guidelines, requiring a transfer of $400,322.55 in HOME-ARP funds to administration.
Affordable Housing Production
The $2,668,810.45 described above will be combined with $1,331,189.55 in HOME funds to create a total pot of $4,000,000 for affordable housing production. This funding amount would likely be sufficient local financing for one affordable rental housing project to qualify for additional state and federal funds and move forward into construction.
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The production of 100 new affordable housing units is identified as a goal in Table 12 of the Action Plan.
Addressing homelessness is also identified throughout the Action Plan as a primary goal, with various activities intended to meet that objective. The proposed activity of allocating HOME funds for affordable housing production, with a priority on PSH reserved for formerly homeless households, would help meet the City's identified goals and is consistent with the intended purpose of the HOME program.
If adopted, staff will return to Council with funding recommendation(s) for new construction of affordable housing through proposals selected via Request for Proposal ("RFP"). The RFP scoring criteria will be limited to developers who responded to the City's Request for Qualifications ("RFQ") published on July 24, 2023, and who were determined to meet the City's qualifications. Additionally, the RFP will prioritize the following proposals:
• Proposals by developers certified as Community Housing Development Organizations ("CHDOs").
CHDOs are nonprofit community-based organizations, certified by the City or another jurisdiction, that have the capacity to develop affordable housing. Per HUD guidelines, 15% of HOME funds must be allocated to CHDOs.
• Proposals for PSH. PSH is housing reserved for homeless families or individuals, with services attached and no time limits on the length of tenancy for residents in good standing. To ensure positive long-term outcomes, tenants are offered access to wraparound services such as case management, substance abuse treatment, mental health support, and/or other assistance. Rent is typically set at 30% of household income and supported with an operating subsidy such as Project-Based Section 8 Vouchers. The PSH model has become widely recognized as a best practice for ensuring that formerly homeless households remain stably housed over the long term. • Proposals for projects that promote geographic equity. The City is committed to affirmatively furthering fair housing and addressing patterns of residential segregation. In accordance with the City's adopted 2021-2029 Housing Element (Appendix E, Table E-18), the City will promote racially and economically integrated communities by giving preference to proposals for projects located in high-opportunity areas of Chula Vista. This will be determined based on factors such as school quality, employment opportunities, income levels, transit access, and other amenities. • Proposals for projects that are ready to proceed quickly into construction and completion. Affordable housing projects can take a number of years to move through the phases of development, from conception, land acquisition, and Planning approvals to financing, construction, completion, and lease-up. Proposals that have already met certain readiness thresholds, such as acquisition of land and securing of planning approvals and environmental determinations, will rank more highly for funding.
Lauderbach Park Improvements
The City owns bauderbach Park, located at 333 Oxford Street, which contains a community center with a kitchen. Lauderbach Park recently underwent outdoor renovations with funding from local sales taxes (Measure P) and a state grant. Separately, the community center within Lauderbach Park is being renovated with $440,000 in CDBG funds through subrecipient SBCS Corporation ('SBCS"). The improvements include upgrades to the plumbing and electrical systems as well as replacement of the fire system, flooring, and hood.
The kitchen is being upgraded to commercial standards to support nutrition education and life skills programming for low income community members.
While carrying out the rehabilitation, the City determined that the sewer line at the community center, which services the building and park restroom facility, needed replacement. As an essential health and safety component of the building, the facility would be inoperable without this improvement. The amount budgeted for facility improvements at bauderbach Park shall not exceed $150,000.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings within 1,000 feet of the boundaries of the property which is the subject of this action at 333 Oxford Street.
Consequently, this item does not present a disqualifying real property related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8), for purposes of the Political Reform Act (Cal. Gov't Code §87100, et seq.).
For the remainder of the actions, staff has reviewed the decision contemplated by these actions and has determined that they are not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no fiscal impact to the City's General Fund as a result of this action, as all costs associated with the projects, programs, and administration of the CDBG, HOME; and HOME-ARP programs are covered by the respective grants.
This action will transfer $400,322.55 in previously appropriated HOME-ARP funds towards the production of housing to administration, resulting in $470,966.55 for allowed grant administration (15%) and $2,668,810.45 for the production of affordable PSH. Additionally, approval would appropriate the following$1,331,189.55 in HOME funds for the production of affordable housing.* Community Development Block Grant Lauderbach Park Community Center $150,000.00
(CĐBG) Improvements
HOME Investment Partnerships Program $1,331,189.55
Production of Affordable Housing
(HOME)
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact to the City's General Fund as a result of this action, as all costs associated with the administration of the CDBG, HOME, and HOME-ARP programs are covered by the respective grants.
ATTACHMENTS
None.
Staff Contact: Stacey Kurz, Director of Housing and Homeless Services Brian Warwick, Housing Manager
Carlos Rodriguez, Management Analyst II