Agenda #: 6.2
Meeting Date: January 18, 2022
TO: Honorable Mayor and Members of the City Council
FROM: Daniel Fox, City Manager
TITLE: COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM ALLOCATIONS FOR FISCAL YEAR 2022/2023.
STRATEGIC
GOAL: Responsible Stewardship of Public Resources
RECOMMENDATION:
A. Open the public hearing to receive public testimony; B. Close the public hearing; and
C. Adopt Resolution No. 2022-05 approving the Community Development Block Grant Funding Allocations for Fiscal Year 2022/2023.
FISCAL IMPACT:
Fiscal Year 2022/2023 funding for the Community Development Block Grant (CDBG) Program is estimated at $275,819, and is received from the Federal Government on a reimbursement basis. Approval of the 2022/2023 CDBG funding allocations will be incorporated into the Fiscal Year 2022/2023 City Budget. The CDBG Program does not impact the City's General Fund budget.
BACKGROUND:
By way of a Cooperative Agreement, the City of Diamond Bar is one of 48 participating cities served by the Los Angeles County Development Authority (LACDA) CDBG Program. The CDBG Program was established through the Housing and Community Development Act of 1974. The primary goals of the CDBG program are to provide for the development of viable urban communities by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income. Eligible CDBG projects are those that meet one of the following national objectives for the program:
• Benefiting low- and moderate-income persons;
• Addressing slums or blight; or
• Meeting a particular urgent community development need.
The projects must also fall within one of the eligible activity categories, which include acquisition of real property for an eligible use; acquisition, construction, and rehabilitation of public facilities; demolition and clearance of deteriorated buildings; community service for low- and moderate-income households; removal of barriers that restrict the mobility for elderly or disabled persons; or special economic development activities.
Funds may be used for a variety of community development activities, such as public services, ADA retrofit and improvements for parks, public works projects, and home improvement programs. The funds may only be used within low and moderate-income census tracts (of which the City has none) and/or to benefit low and moderate-income persons and/or presumed eligible persons (elderly or disabled).
Diamond Bar’s preliminary funding allocation for Fiscal Year 2022/23 is $230,359. In addition to the annual allocation, $45,460 will be available from the following sources:
• $25,460 from prior year project savings.
• $40,000 from two Home Improvement Program deferred loan repayments.
Total funding for the FY 2022/23 CDBG program is thus $295,819.
LACDA anticipates notification of the final allocation during the first quarter of 2022.
The CDBG Program has experienced funding adjustments in prior years, so the City should be prepared to accommodate a federal funding adjustment that could affect LACDA’s final allocations. In the event that the final allocation is higher or lower than this report’s estimate by 25% or less, the draft resolution provides authorization for the City Manager to administratively adjust the individual program allocations. Should the final allocation vary by more than 25%, City Council approval of any program allocation changes would be required.
The City’s approved projects and budget must be submitted to the LACDA by February 1, 2022. The City of Diamond Bar’s projects and budget will ultimately become part of the Los Angeles County’s CDBG program application to the U.S. Department of Housing and Urban Development (HUD).
Distribution of Funds
The City’s allocation of CDBG funds is subject to the following distribution limits:
• 20% of new allocations to support community service programs for eligible persons. • 80% of new allocations toward public works and housing projects that directly benefit eligible persons (e.g., ADA improvements for sidewalks and parks, and deferred loans for home improvements).
• Unallocated funds, including deferred loan repayments and carryovers from the prior fiscal year may be used to fund eligible public works and housing projects.
The cost of project administration and contract compliance services are charged on a project-based model which allows the City use CDBG funds to pay for costs associated with meeting the regulatory requirements on a per project basis. CDBG project administration is being implemented by City staff with assistance from the City’s consultant, Diana Cho and Associates. Project management for the CDBG-funded Home Improvement Program is performed by FRJ & Associates on behalf of the City.
DISCUSSION:
The recommended project funding is based on the applications submitted and the estimated availability of funds. The City provides support to the projects that receive funding with technical assistance and monitoring to ensure compliance. The City is responsible for overseeing the operations of all the subrecipient supported activities, including compliance with all applicable federal requirements and for monitoring the achievement of performance goals.
Current Fiscal Year CDBG Projects and Allocations ($335,387) As part of its budget submittal to the LACDA, the City must describe the programs that are currently being implemented and how those programs are meeting the goals and objectives established by the City. The programs funded for the current fiscal year, as amended, are thus summarized below:
o Senior Programming ($46,072) – These programs normally include information and referral, physical mobility classes, seminars, arts and crafts, game days, senior excursions, and special events, as well as partially subsidizing the salary of a Recreation Specialist. General Insurance has been purchased for the senior groups utilizing the Heritage Park Community Center and Diamond Bar Center. More than 500 seniors participate in the various programs and activities offered by the City.
Senior programming incorporated virtual learning, recreation and other remote activities in response to COVID-19 restrictions.
o Home Improvement Program (HIP) ($110,796) – The HIP offers deferred loans to eligible low- and moderate-income homeowners of single-family detached housing for necessary home improvements, as well as repairs to mitigate building and safety code deficiencies and/or violations. The City’s HIP policies provide interest-free, deferred loans of up to $20,000 to eligible households. Loans become payable when the homes are sold or refinanced. As of the publication of this report, two (2) projects were completed during the current fiscal year, three (3) projects have been approved and are entering the bidding phase, and three (3) additional projects are currently under review.
o Area 2 Residential Neighborhood ADA Curb Ramp Improvements Project ($178,519) – Area 2 is bounded by Grand Avenue, Diamond Bar Boulevard, Pathfinder Road, the 57 Freeway and the 57/60 Confluence, as illustrated below.
This CIP project provides ADA accessibility to existing sidewalks through the construction of 24 ADA-compliant curb ramps at various locations where no curb ramps or substandard curb ramps exist. Area 2 was initially funded for FY 20/21, but the monies were repurposed in June of 2020 to provide Business Recovery Program grants.
Proposed CDBG Projects and Allocations for FY 2022/23
Federal regulations require CDBG funds to be allocated and expended within three (3) years. In addition, the LACDA strongly encourages participant cities to earmark all monies as soon as feasible.
As stated in the Background section of this report, the CDBG funding estimate for FY 2022/2023 is $275,819. The breakdown for the estimated funds is as follows:
New annual allocation $230,359
Prior year unallocated/reprogrammed funds 25,460
HIP loan repayments 40,000
Total estimated CDBG funds for FY 2020/21 $295,819
N
Program Selection Process
On October 15, 2021, the City posted a notice on its website to inform organizations that it was accepting applications for program funding through November 19, 2021.
Applications from the City and from the City’s five active senior clubs were received during the application period to support the following programs and projects for the next fiscal year:
1. Senior Programs
2. Home Improvement Program
3. Area 3 Residential Neighborhood Curb Ramps
Funds requested from these three applications total $322,688, which is $26,869 more than the estimated available funds. The recommended distribution of CDBG monies to utilize the entire funding estimate is detailed below.
Public Services/Senior Programs
The public service funding cap is $46,072, or 20% of the estimated new CDBG annual allocation for FY 2022/23.
The only application submitted for funding from this allocation was submitted by the Diamond Bar Parks and Recreation Department to support senior programming, and has requested $38,688 (see Attachment 2). The amount requested would leave the estimated allocation for this category with a surplus of $7,384.
The City’s Senior Programs are funded through the Parks and Recreation Department budget. The City Council has traditionally authorized a portion of the annual CDBG funding to be allocated to the Senior Programs budget.
As in prior years, the Senior Programs application proposes to accommodate several of the activities and supplies as requested by the Diamond Bar Senior Citizens Club, Diamond Bar Evergreen Senior Association, Sunshine Seniors Association, Diamond Age Senior Club, and Super Diamond Age Senior Club. The application also requests reimbursement for a portion of the City’s Senior Program Coordinator’s hours spent administering the programs, as well as for supplies purchased to host events at the Diamond Bar Center.
Recommendation
Since no other proposals in the Public Services category were received, staff recommends that the entire FY 2022/2023 funding estimate of $46,072 be allocated to Senior Programs. This amount will cover supplies and liability insurance, as well as CDBG project administration consultant costs and a portion of the Recreation Specialist salary.
Public Works and Housing
The allocation for Public Works and Housing projects includes $184,287 from the estimated FY 2022/2023 allocation (i.e., 80% of $230,359) and $65,460 in unallocated CDBG funds accumulated from project savings and loan repayments, for a total of $249,747.
Staff received two applications for funding from this category, which are included in Attachment 2:
1. The Diamond Bar Public Works Department requests $184,000 for the Area 3 Residential Neighborhood ADA Curb Ramps Improvement Project.
2. The Diamond Bar Community Development Department requests $100,000 for the Home Improvement Program.
The total funding requested from these two applications is thus $284,000, or $34,253 in excess of the estimated funding available in this category. o Area 3 Residential Neighborhood ADA Curb Ramp Improvements Project Area 3 is bounded by Pathfinder Road to the north, the City boundary with Rowland Heights to the west, the City boundary with unincorporated LA County to the south, and The Country to the east. The purpose of this CIP project is to provide ADA accessibility to existing sidewalks through the construction of ADA-compliant curb ramps at various locations where no curb ramps are presently provided.
The application requests $184,000 to construct 26 curb ramps to comply with the latest ADA requirements, as well as CDBG administration costs. o Home Improvement Program
As stated, the HIP provides deferred zero-interest loans of up to $20,000 to eligible low and moderate-income homeowners for necessary home improvements as well as repairs to mitigate building and safety code deficiencies and/or violations. The proposed allocation of $100,000 includes program administration funds for the HIP consultant.
Recommendation
Because estimated funds are not available to fully fund these two requests, and because participation in the Home Improvement Program has increased over the past two years, staff recommends that CDBG monies allocated for construction be appropriated as follows:
Area 2 Curb Ramp Project $ 149,747
Home Improvement Program $ 100,000
Total $ 249,747
SUMMARY OF RECOMMENDATIONS:
Total funding available for CDBG programs during the upcoming fiscal year is estimated to be $295,819. The funding requests received total $322,688, or $26,869 in excess of the estimated allocation. Staff recommends the following distribution of funds, the total of which is equal to the estimated allocation:
FISCAL YEAR 2022/23 CDBG PROGRAM ALLOCATION RECOMMENDATIONS
PUBLIC SERVICES
Senior Programs $46,072
Public Services Subtotal $46,072
PUBLIC WORKS & HOUSING
Area 3 ADA Curb Ramp Improvements $149,747
Home Improvement Program 100,000
Public Works & Housing Subtotal $249,747
Total CDBG Funding Recommendation for FY 2022/23 $295,819 ESTIMATED FY 2019/20 FUNDS AVAILABLE $295,819
PREPARED BY:
REVIEWED BY:
Attachments:
1. 6.2.a Resolution No. 2022-05 Adopting the FY 2022/23 CDBG Budget
2. 6.2.b FY 2022/2023 CDBG Program Applications