Fremont City Council Meeting: 06/21/22 07:00 PM
3300 Capitol Avenue Div/Dept: Human Services Department Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4637) DOC ID: 4637 D
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 1 CDBG FUNDING RECOMMENDATIONS AND FY 2022-23 ANNUAL ACTION PLAN - Public Hearing (Published Notice) on the Use of Federal Community Development Block Grant Funds for Fiscal Year (FY) 2019-20 and FY 2022-24; Adopting a Resolution Approving the FY 2022-23 Annual Action Plan, Amending the FY 2019- 20 Action Plan, amending CARES Act Funding; and Authorizing the City Manager to Execute Agreements with the U.S. Department of Housing and Urban Development and CDBG Grantees and Programs and Making FIndings of CEQA Exemption
Contact Persons:
Name: Robert Lopez Suzanne Shenfil
Title: CDBG Administrator Director
Div/Dept: Human Services Department Human Services Department Phone: 510-574-2043 510-574-2051
E-Mail: [email protected] [email protected]
Executive Summary: The Citizens Advisory Committee (CAC) and staff have completed the Community Development Block Grant (CDBG) proposal process which covers FY 2022/23 and 2023/24.
Approximately $3,441,950 in CDBG funds will be available to be allocated over the next two years. Staff and the CAC recommend allocating $2,714,780 to projects and programs and holding $727,170 for any potential project contingencies or emerging priorities. It is recommended the City Council take the following actions:
1. Hold a public hearing on the proposed FY 2022-24 CDBG Program Final Statement of Community Development Objectives and projected Use of Funds.
2. Approve $2,714,780 in CDBG funding allocations over the next two fiscal years, including:
a. $1,250,000 for capital projects,
b. $280,000 for microenterprise projects,
c. $513,705 for public services, including $218,000 for housing public services programs and $295,705 for social service programs, and d. $671,075 for administration
3. Adopt a resolution approving the FY 2022-24 CDBG Program Final Statement of Community Development Objectives and Projected Use of Funds, and the FY 2022/23 Annual Action Plan;
4. Authorize and approve the City Manager or her designees to enter into agreements with HUD and nonprofit grantees.
In addition to its annual CDBG entitlement, the City was awarded CDBG Coronavirus Aid, Relief and Economic Security Act (CARES Act) funds for the purpose of preventing, preparing for and responding to the COVID-19 pandemic. It is recommended that the City Council take the following actions:
1. Re-allocate $340,000 in CDBG CARES Act funding to the following projects:
Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 2 a. $190,000 for Project Homekey Motel 6 operating costs (contingent on project approval by the State)
b. $150,000 for Safe Parking Program
2. Adopt a resolution amending the City’s FY 2019/20 CDBG Action Plan.
BACKGROUND:
Annual CDBG Entitlement Funding: The CDBG Program is funded through federal entitlement funds from the U.S. Department of Housing and Urban Development (HUD). The primary objectives of the CDBG program are to develop viable urban communities, principally for low- and moderate-income households, through the provision of decent housing, a suitable living environment, and economic opportunity. CDBG funds must be used for activities which:
1. Primarily benefit low- and moderate-income families. Most households receiving benefit from this program cannot earn more than 80% of the median income.
For example, an eligible family of three cannot earn more than $98,650. Most funds, however, based on current CDBG usage, serve families with even lower incomes, which are under 50% of the median income ($61,650 for a family of three);
2. Aid in the elimination of slum or blight; or
3. Other activities designed to meet urgent community needs when conditions may pose an immediate threat to the health or welfare of the community. Federal rules allow each community to tailor its program to address specific local needs.
The City Council’s funding decisions are submitted to HUD as part of the City’s annual application (annual Action Plan) for CDBG funds, which includes a final Statement of Community Development Objectives and Projected Use of Funds (see Exhibit 2), as well as an Action Plan.
The City allocates CDBG funds in two-year funding cycles. This allows agencies to better budget their resources and reduces the amount of paperwork they need to complete each year. The City commits a portion of its estimated funding sources in the first year and holds the remaining funds for unforeseen project contingencies and emerging projects in the second year. This funding recommendation is for FY 2022-23 through FY 2023-24.
CDBG CARES Act Funding: In addition to the annual entitlement funds described above, during national economic or social emergencies, the Federal government sometimes utilizes the CDBG program as a mechanism for quickly distributing funding to local entitlement jurisdictions, for the purpose of supporting low and moderate- income residents.
In 2020, HUD awarded the City two special allocations of CDBG Coronavirus Aid, Relief and Economic Security Act (CARES Act) funding, including $995,082 in CARES Act Round 1 funding and $1,362,522 in CARES Act Round 3 funding, for the purpose of preventing, preparing for and responding to the COVID-19 pandemic. HUD also issued emergency administrative waivers that allowed the City to quickly amend its FY 2019/20 Action Plan to utilize these funding allocations immediately.
Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 3 Permanent Supportive Housing: Building on the success of Project Roomkey, which secured hotel and motel rooms for vulnerable homeless persons to rest and recuperate during the COVID-19 pandemic, the State of California created the Homekey program as the next phase of a COVID-19 response to protect homeless Californians. Homekey is an opportunity for state, regional, and local public entities to develop a broad range of housing types, including but not limited to hotels and motels, into permanent or interim housing for the chronically homeless population.
On January 18, 2022, the City Council authorized the submittal of a $40.2 million Homekey Round 2 application to the State of California Housing and Community Development Department (HCD) for the conversion of Motel 6 at 46101 Research Avenue to permanent affordable supportive housing. If approved by the State, this project would provide 156 units of affordable supportive housing for homeless individuals. As part of this Council action, the City allocated $190,000 in CDBG CARES Act funding for operating costs and $750,000 in CDBG Entitlement funding for construction.CDBG regulations require the City to incorporate these actions via Resolution and Action Plan Amendments. If the City’s HomeKey project application is not approved by the State, funds can be re-allocated for other CDBG eligible uses.
DISCUSSION/ANALYSIS:
CDBG CARES ACT Funding Recommendations
Eligible activities must also be consistent with the Housing and Community Development Act of 1974, including a focus on benefitting households earning 80% of area median income ($88,700 for a family of three) or below. In alignment with CDBG program requirements, staff recommends reallocating $340,000 to the following programs in Table 1:
Table 1: Proposed CDBG CARES Projects Amount
1. Project Homekey Operating Costs
Operating Costs associated with Motel 6 conversion to
permanent affordable housing for chronically homeless.
$190,000
2. Safe Parking Program
Set-up and operation of alternate non-congregate shelters. $150,000
Project #1 – Project Homekey Permanent Supportive Housing: The City has pursued numerous strategies to provide resources and shelter to unhoused residents. In 2021, in anticipation of the state of California’s Project Homekey Round 2, the City accepted a proposal by from Shangri-La Industries, Inc. (SLI), a Los-Angeles-based for-profit affordable housing developer, to convert a Motel 6 within Fremont to permanent supportive housing for chronically homeless households. Staff identified funding sources to assist with this project including $190,000 in Federal CDBG CARES Act funds for operating costs. The recommended action will allow for the timely expenditure of the available CDBG CARES Act funds as required by CDBG timeliness rules.
Project #2 – Safe Parking Program: On June 15, 2021, Council adopted an ordinance amending Fremont Municipal Code (FMC) Chapter 18.25 (Definitions) and Chapter 18.190 (Special Provisions Applying to Miscellaneous Uses), which defined “safe parking site” and Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 4 allowed safe parking sites as an ancillary use at properties with permitted assembly uses, quasi-public facilities (operated by a private, nonprofit educational, religious, recreational, charitable or medical institution with the primary purpose of serving the general public), and public facilities.
The value of this resource has become even more apparent during the COVID-19 pandemic.
The non-congregate shelter provided by the safe parking program allows at-risk homeless residents to socially isolate themselves, and practice good hygiene.
This program will continue to target Fremont residents experiencing homelessness, that are also considered COVID-19 at-risk (seniors or those with underlying health conditions).
Human Services Department staff will continue to work with other City departments, including the Police, Community Services, and Community Development Departments, to identify and refer eligible candidates for this temporary shelter opportunity. The recommended action would assist in setting up and operating Safe Parking sites.
Annual CDBG Entitlement Funding Recommendations
Table 2 shows the funding sources for the FY 2022/23 and FY 2023/24 CDBG Entitlement Program.
Table 2: FY 2022/23 and 2023/24 CDBG Entitlement Funding Sources FY 2022-23 FY 2023-24
1. CDBG Entitlement $1,744,934 $1,570,441*
2. Estimated Program Income $20,000 $20,000
3. Reprogrammed Funds and Project Reserve $89,324 $0
Total FY 2022/23 – 23/24 CDBG Funding $1,851,509 $1,590,441 *the actual entitlement amount will not be confirmed until March 2023. but does assume a 10% reduction in case HUD reduces annual awards.
CDBG RFP Process: The availability of CDBG funds was advertised through the newspaper, the City’s web page, the City’s cable channel, and an extensive mailing to social services agencies. The RFP process was conducted as follows:
* RFP materials were made available to the public on January 20, 2022. * On January 20, 2022 staff conducted a publicly noticed grant proposal workshop for prospective CDBG applicants. The workshop gave new agencies the opportunity to understand the proposal process, including proposal criteria and the CAC’s role in the process. The CAC is a committee which is advisory to City staff in the review of CDBG funding requests. Seven (7) prospective applicants attended the workshop.
* Proposals for CDBG funding were submitted by the deadline of February 17, 2022 * On March 3, 2022, staff and the CAC held a public meeting to develop supplemental questions for applicants to answer. In reviewing the projects, the CAC and staff evaluated each proposal based on the following criteria:
• Benefit to low- and moderate-income households;
• Ability of the project to address the most critical local needs of lower income residents;
Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 5 • Feasibility of the project to succeed;
• Cost effectiveness;
• Impact of funding on the outcome of the proposed activity; • Management and performance capacity of the project sponsor; and • Completeness of the proposal.
* On March 17, 2022, the CAC and staff conducted a public hearing to interview agencies regarding their proposals.
* On April 7, 2022, the CAC and staff held a public hearing to develop recommendations for the City Council.
As a member of the Alameda County HOME Consortium, the City also participates in the Consortium’s citizen participation process. The Consortium will hold a pre-draft public hearing at HCD’s Housing and Community Development Advisory Committee Meeting and will consist of an overview of the Action Plan and request for input on housing and community development needs.
Capital Recommendations: As mentioned earlier, if the funds for Project Homekey $750,000) are not approved by the State, then this funding will go into the project contingency reserve to be made available for allocation at a later time. Additionally, the CAC and staff recommend $500,000 for Habitat for Humanity to continue their Housing Rehabilitation Program over the next two fiscal years. These projects in Table 2 are designed to address the needs of low- and moderate-income households with incomes under 80% of the area median income and are consistent with the City’s FY 2020-2024 Strategic Plan.
Table 3: Capital Project Recommendations
Proposed Capital Projects Amount
Requested
Recommended
Funding
Project Homekey Round 2 –(1/18/22) $750,000 $750,000
Habitat for Humanity East Bay/Silicon Valley
Housing Rehabilitation Program
$500,000 $500,000*
Capital Projects Subtotal: $1,250,000 $1,250,000
*$250,000 for FY 2022-23 and $250,000 for FY 2023-24
Public Service and Administration Recommendations: Approximately $513,705 will be available over the next two fiscal years for public service programs. The CAC and staff recommend $513,705 in funding as follows:
• $218,000 to be allocated to Project Sentinel to carry out the Fair Housing and landlord/tenant counseling programs over the next two fiscal years. • $295,705 to be allocated to fund a combination of social services provided by the City’s Human Services Department, as well as social service grant agencies recommended by the Human Relations Commission.
Table 4: Public Service and Recommendations
Proposed Projects Funding
Requested
Recommended
Funding
2022/23 2023/24 2022/23 2023/24
Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 6 Project Sentinel, Inc. – Fair
Housing and Landlord/Tenant
Counseling
$118,500 $118,500 $109,000 $109,000
Safe Alternatives to Violent
Environments (SAVE) – Domestic
violence shelter & assistance
$65,000 $65,000 $65,000 $65,000
Public Service Projects –Provided by
the City’s Human Services
Department and non-profit social
service grantees
$120,063 $120,063 $101,139 $64,566
Public Service Projects Subtotal: $303,563 $303,563 $275,139 $238,566 Two Year Total: $607,126 $513,705
Additionally, staff administration cost is capped by HUD at 20% of the sum of entitlement grant and projected program income each fiscal year. Staff recommends that $352,987 be allocated to administration in FY 2022-23 and $318,088 in FY 2023-24.
Staff is request ing that the City Council authorize the City Manager or her designees to increase the CDBG funding for the approved public service projects and administration in FY 2023-24 if additional funds are available.
Microenterprise Recommendations: Approximately $280,000 is available over the next two fiscal years for this funding category. Of this amount, the CAC and staff recommend the following allocations:
• $90,000 to be allocated to Afghan Coalition Microenterprise over the next two fiscal years
• $90,000 to be allocated to the Community Child Care Council of Alameda County (4C’s) over the next two fiscal years
• $100,000 to be allocated to the Fremont Family Resource Center SparkPoint Family Economic Success over the next two fiscal years
Table 5: Microenterprise Project Recommendations:
Proposed Projects Funding Requested Recommended
Funding
2022-23 2023-24 2022-23 2023-24
Afghan Coalition $45,000 $45,000 $45,000 $45,000
Community Child Care Council of
Alameda County (4C’s)
$45,000 $45,000 $45,000 $45,000
Fremont Family Resource Center
SparkPoint Family Economic Success
$50,000 $50,000 $50,000 $50,000
Public Service Projects Subtotal: $140,000 $140,000 $140,000 $140,000 Two Year Total: $280,000 $280,000
CDBG Contingency Reserve: After taking into consideration the additional allocation recommendations found in Table 5, there is a total of $727,170 in remaining funds.
To ensure that entitlement jurisdictions fulfill their citizen participation obligation in a timely manner, HUD advised that jurisdictions include “contingency provisions” language in Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 7 their action plans, which explains how the jurisdictions will adjust their proposed plan to match their actual CDBG entitlement allocation amounts. At the funding recommendations meeting, the CAC and staff agreed on the following contingency plan: if additional CDBG funds are available, the funds will be kept in reserve to be used for gap funding for current capital projects and for emerging needs projects.
The FY 2022-23 Action Plan, Proposed Final Statement of Community Development Objectives and Projected Use of Funds:
Under the 1990 National Affordable Housing Act, localities eligible to receive federal funding for housing and community development programs (CDBG, HOME, etc.) administered by HUD are required to prepare an annual Action Plan to report on the programs and activities that address community development information on federal, state and local funding sources for community development and affordable housing activities, a description of activities to be undertaken using federal funding sources, a description of other actions the City will be taking to reduce barriers to affordable housing, lead-based paint hazards, and poverty, as well as a description of efforts to improve institutional structure, public/private coordination, and public housing resident initiatives. The City’s Draft FY 2021-22 Action Plan is enclosed (Exhibit 2). The City is also required to submit a Proposed Final Statement of Community Development Objectives and Projected Use of Funds (Exhibit 3).
FISCAL IMPACT: There is no general fund impact or match requirement for this funding.
The appropriation of the funds was included in the FY 2022/23 Adopted Operating Budget.
ENVIRONMENTAL REVIEW:
All of the projects being recommended are exempt from review under the California Environmental Quality Act (CEQA), pursuant to, without limitation, pursuant to CEQA Guidelines Section 15301 as the repair, maintenance or minor alteration of existing facilities involving negligible or no expansion of use, and/or CEQA Guidelines Section 15302. as replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site and have substantially the same purpose and capacity as the replaced structure. Each of the foregoing provides a separate and independent basis for CEQA exemption.
Consistent with NEPA regulations, funding will not be distributed to a project until appropriate NEPA review and clearance is completed for that project.
ATTACHMENTS:
• Exhibit 3 - FY 2022-2024 Proposed Final Statement Final • Exhibit 1 - Staff Analyses FY 2022-2024
• Exhibit 2 - Fremont - DRAFT 2022-2023 Annual Action Plan • Exhibit 4 - Resolution FY 22-23 CDBG Funding Recommendations Clean
RECOMMENDATION: Staff recommends that the City Council:
1. Hold a public hearing on the proposed FY 2022-24 CDBG Program Final Statement of Community Development Objectives and Projected Use of Funds Staff Report (ID # 4637) Meeting of June 21, 2022
Updated: 6/16/2022 8:02 PM by Alberto Quintanilla D Page 8 and the FY 2022/23 Annual Action Plan, and the Amendment to the FY 2019/20 Action Plan;
2. Adopt a resolution that:
a. Allocates CDBG funds for FY 2022/23 and FY 2023/24 in the amounts specified in the Final Statement of Community Development Objectives and Projected Use of Funds (“Final Statement”), as set forth in Exhibit 3 to this Staff Report. b. As required by CDBG regulations, approves the reallocation of $340,000 in CDBG CARES Act funding to the following projects:
• $190,000 for Project Homekey operating costs (contingent on project approval).
• $150,000 for Safe Parking Program.
c. Amends the City’s FY 2019/20 CDBG Action Plan to incorporate new CARES Act funded project, as recommended by staff in the amounts stated herein. d. Authorizes the City Manager or his designee to submit the FY 2022-24 CDBG Program Final Statement of Community Development Objectives and Projected Use of Funds, and the City’s CDBG FY 2022/23 Annual Action Plan, as recommended by staff in the amounts stated herein.
e. Authorizes staff to:
• Allocate additional funds to public service projects should the City receive additional program income in FY 2021/22 or a greater entitlement allocation from HUD in FY 2022/23.
• Reserve unallocated funds to provide gap funding or fund projects that meet emerging needs.
f. Approves and authorizes the City Manager or her designees to execute CDBG Entitlement and funding agreements with HUD.
g. Approves and authorizes the City Manager or her designees to execute agreements effective July 1, 2022, with the grantees recommended for funding by staff in the amounts set forth herein, contingent upon a finding of no significant impact in the corresponding environmental assessments and completion of the required public comment period.