TITLE:
Receive Report, conduct public hearing, and consider adoption of A city council resolution approving an application for funding and the execution of a grant agreement and any amendments thereto from the 2023 and/or 2024 funding year of the state cdbg program ISSUE:
Every year, the California Department of Housing and Community Development (HCD) releases a funding opportunity under the Community Development Block Grant (CDBG) program. Funds for the program are made available to HCD from the United States Department of Housing and Urban Development (HUD). As a non-entitlement jurisdiction, the City is eligible to apply for grants through the CDBG program.
The City held a design phase hearing during a regular meeting of the City Council on July 8, 2024, in order to give the public an opportunity to comment regarding potential projects and programs for CDBG applications using Program Income (PI). At this meeting, staff brought forward two potential activities for Council consideration, and Council gave direction to staff to prepare an application for the 2023 PI Only solicitation in the amount of $570,000 for a Business Assistance Loan Program.
The PI Only solicitation is currently open, and applications are accepted on a rolling basis. A public hearing must be held before submittal of an application, to allow the public an opportunity to provide feedback regarding the proposed application. Following the public hearing, Council may consider adopting a resolution approving the application and authorizing the Mayor to execute the contract and any amendments thereto.
ANALYSIS:
About the Business Assistance Loan Program
The Business Assistance Loan Program serves start-ups or existing businesses within City limits. Funds may be used for purchase of equipment, inventory, real property, working capital, debt consolidation, and construction (Davis-Bacon Labor Law requirements must be followed for construction). Businesses may be loaned up to $300,000, depending on available funds. For every $35,000 loaned, one full-time job is created or retained, and 51% of those jobs are filled by members of the low to moderate-income group. Loan amounts and terms are determined on a case by case basis, with interest rates starting as low as 1%. Terms are dependent on the recipient’s cash flow needs and risk level of the loan. Repayment terms are based on the capacity of the business to repay, with deferral of payments possible based on income and expense projections. There are no loan fees.
Business Assistance Loan Program Budget
The Business Assistance Loan Program would be funded entirely with CDBG Program Income funding, with the following activities and amounts:
Funding Category
Amount
Activity (Direct Loans to Businesses & Activity Delivery) $487,180
General Administration (17%)
$82,820
Total
$570,000
Activity
Activity costs include direct loans to businesses and Activity Delivery (AD) costs. AD costs include staff and consultant expenses in support of the specific activity, such as application processing and loan underwriting. There is no specific cap on AD costs, though costs of less than twenty-five percent (25%) of the total activity costs is recommended as a reasonable amount. Typically, the City’s loan programs operate with AD costs of approximately fifteen percent (15%).
General Administration
General Administration (GA) allows for ongoing administration of the CDBG program and includes any allowable expense on a CDBG-eligible activity. Under the annual CDBG funding cycle, GA is typically capped at seven percent (7%) of the total award. In the case of Program Income, GA is allowed at seventeen percent (17%) of the total award.
RECOMMENDED ACTION:
Conduct the Public Hearing and adopt a City Council resolution approving an application for funding and the execution of a grant agreement and any amendments thereto from the 2023 and/or 2024 funding year of the State CDBG program.
ALTERNATIVE ACTION(S):
Conduct the Public Hearing and direct staff not to prepare an application for 2023 PI Only CDBG solicitation. The City would instead need to apply to use PI under the 2024 NOFA solicitation in order to encumber and expend Program Income.
FISCAL IMPACT:
CDBG funds allow the City to conduct activities and complete projects to benefit the community, in particular the City’s low and moderate-income residents, for which funding would otherwise be unavailable. CDBG activities also create job opportunities in the community. CDBG grant administration requires significant commitment of staff time, but CDBG provides funding for administrative activities that is generally adequate to service the program.
CONSISTENCY:
The State CDBG mission is to improve the lives of low and moderate-income residents through the creation and expansion of community and economic development opportunities, which supports livable communities for all residents. This mission is consistent with City Priority Areas established in City Council’s April 2019 Goal Setting process including Priority Area “Jobs/Industry” (Economic Development loans and grants, Business Assistance Program); Priority Area “Quality of Life” (public improvements projects); and Priority Area “Infrastructure” (community development capital projects).
IMPLEMENTATION/TIMEFRAMES:
If, after holding the Public Hearing, Council adopts the proposed resolution, staff will submit an application for 2023 PI Only CDBG solicitation as soon as possible. The resulting contract will be for a three-year term, and will likely be executed in the fall.
ATTACHMENTS:
2023 Community Development Block Grant Program Notice of Funding Availability – Amendment #1.
Proposed Resolution Approving Application Submittal
Exhibit A - Proposed Resolution Approving Application Submittal – CDBG Required Format Public Hearing Notice for Application Submittal (English) Public Hearing Notice for Application Submittal (Spanish) NOTIFICATION:
CDBG “Notify Me” Subscribers
AGENCY: City CouncilMEETING DATE: July 22, 2024DEPARTMENT: Economic DevelopmentPRESENTED BY: L. PetersonEMAIL ADDRESS: [email protected]: City CouncilMEETING DATE: July 22, 2024DEPARTMENT: Economic DevelopmentPRESENTED BY: L. PetersonEMAIL ADDRESS: [email protected] AGENCY: City Council
MEETING DATE: July 22, 2024
DEPARTMENT: Economic Development
PRESENTED BY: L. Peterson
EMAIL ADDRESS: [email protected]
AGENCY: City Council
MEETING DATE: July 22, 2024
DEPARTMENT: Economic Development
PRESENTED BY: L. Peterson
EMAIL ADDRESS: [email protected]
AGENDA ITEM SUMMARY