DATE:
November 15, 2022
TO:
Mayor and City Council Members
FROM:
Nils Bentsen, City Manager
BY:
Rachel Molina, Assistant City Manager
Victor Knight, Economic Development Manager
SUBJECT:
Substantial Amendment to the Community Development Block Grant (CDBG) 2021-2022 and 2022-2023 Annual Action Plans
RECOMMENDED ACTION
It is recommended that the City Council: (1) conduct a public hearing and upon accepting public testimony, adopt Resolution No. 2022-76 including any modifications or amendments thereto (2) approve a Substantial Amendment to the Community Development Block Grant (“CDBG”) 2021-2022 and 2022-2023 Annual Action Plans (“Action Plans”) by repurposing a total of $3,747,044 from prior year unprogrammed CDBG funds and program income from the Neighborhood Stabilization Program (NSP) to the 2021-2022 Street Improvement Project; (3) authorize staff to appropriate prior year unprogrammed CDBG funds and NSP program income for the 2021-2022 Street Improvement Project; and (4) authorize the City Manager and/or Designee to execute and transmit all necessary documents, including the Substantial Amendment to the Action Plans, and any additional amendments, to assure the City’s timely expenditure of CDBG funds.
BACKGROUND
The U.S. Department of Housing and Urban Development (“HUD”) requires all entitlement communities receiving CDBG funds to prepare and submit a Consolidated Plan (“Con Plan”) every five (5) years to establish a unified, strategic vision for economic development, housing and community development activities.
The Con Plan is carried out through Action Plans, which provide the activities and resources that will be used each year to accomplish the goals identified in the Con Plan. The City is required to submit an Action Plan to HUD each year of the five-year Con Plan period.
Substantial Amendments to a Con Plan and/or Action Plan are required when a “substantial” change is proposed to funding levels, goals, or activities. In this case, the repurposing of $3,747,044 from unprogrammed CDBG funds and program income from the NSP to the 2021-2022 CDBG Street Improvement Project triggers a “substantial” change.
ISSUES/ANALYSIS
In 2008, the City received funds under the NSP which Congress created to counteract the negative consequences of the foreclosure crisis brought about by the housing market collapse. Since its inception, the City has expended all its NSP grant funds and anticipates closing out the program during the 2022 calendar year. The City’s NSP has generated program income in the amount of $3,535,941 that is allowed to be transferred to the CDBG program and allocated to eligible activities.
This Substantial Amendment to the Action Plans is necessary because the City is proposing to (a) allocate $211,103 in prior year uncommitted CDBG funds, and (b) transfer $3,535,941 of NSP program income to the City’s existing 2021-2022 CDBG Street Improvement Project, upon completion of a final NSP draw, as approved by HUD. The 2021-2022 CDBG Street Improvement Project will be split into two (2) phases, completed simultaneously, to ensure timely completion. The project will improve various roadways throughout CDBG eligible areas within the City’s limits. The proposed repurposing of the funds to the 2021-2022 CDBG Street Improvement Project is anticipated to assist a vast amount of residents.
FISCAL IMPACT
There will be no negative impact to the City’s General Fund. The $211,103 in uncommitted prior year CDBG funds impacted by this Substantial Amendment has previously been awarded to and allocated by the City through its annual allocation. The $3,535,941 in program income was generated by the City’s NSP and has been approved by HUD to be transferred to the City’s CDBG program budget. The Substantial Amendment will require a City budget amendment for the following: (a) an increase to NSP account 257-25-270-2700-9000 to facilitate the transfer of $3,535,941 in NSP funds to CDBG Fund 251; and (b) an increase of $3,567,083 to CDBG account 251-29-700-7166-8000 in order to allocate funds to the 2021-2022 CDBG Street Improvement Project. This will result in a FY 2022-23 project budget of $3,921,683, in alignment with the CDBG Substantial Amendment.
ALTERNATIVE(S)
Provide alternative direction to staff.
ATTACHMENT(S)
Substantial Amendment to Action Plans
Resolution No. 2022-76
Page PAGE 2 of NUMPAGES 2
Staff Report to the Mayor and Council Members
Substantial Amendment to CDBG 2021-2022 & 2022-2023 Action Plans November 15, 2022
City of Hesperia
STAFF REPORT