City Council/Public Finance and Economic Development Authority/Parking Authority
September 16, 2024

For the Period:

July 1, 2023, to June 30, 2024

DRAFT - 2023
Consolidated Annual
Performance and
Evaluation Report
(CAPER)
Prepared by: City of Merced Housing Division

DEVELOPMENT SERVICES DEPARTMENT
For City Council Review and Approval
September 16, 2024
CAPER 1
OMB Control No: 2506-0117 (exp. 09/30/2021)

Table of Contents
CR-05 - Goals and Outcomes ..................................................................................................................................................................................... 2 CR-10 - Racial and Ethnic composition of families assisted ..................................................................................................................................... 18 CR-15 - Resources and Investments 91.520(a) ........................................................................................................................................................ 20 CR-20 - Affordable Housing 91.520(b) ..................................................................................................................................................................... 27 CR-25 - Homeless and Other Special Needs 91.220(d, e); 91.320(d, e); 91.520(c) ................................................................................................. 32 CR-30 - Public Housing 91.220(h); 91.320(j) ............................................................................................................................................................ 37 CR-35 - Other Actions 91.220(j)-(k); 91.320(i)-(j) ..................................................................................................................................................... 39 CR-40 - Monitoring 91.220 and 91.230 .................................................................................................................................................................... 46 CR-45 - CDBG 91.520(c) ........................................................................................................................................................................................... 49 CR-50 - HOME 24 CFR 91.520(d) .............................................................................................................................................................................. 51 CR-58 – Section 3 ..................................................................................................................................................................................................... 56

CAPER 2
OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-05 - Goals and Outcomes
Progress the jurisdiction has made in carrying out its strategic plan and its action plan. 91.520(a) This could be an overview that includes major initiatives and highlights that were proposed and executed throughout the program year.

The City of Merced has prepared the 2023 Consolidated Annual Performance and Evaluation Report (CAPER) for the period of July 1, 2023, through June 30, 2024. The 2023 CAPER describes a general assessment of the City's progress in carrying out projects and programs during the 2023 Program Year with the use of CDBG, HOME, HOME-ARP, and CDBG-CV funds, provided by the U. S. Department of Housing and Urban Development (HUD), primarily to benefit Low and Moderate Income persons (LMI) and/or LMI areas within the City limits.

The CDBG allocation for the 2023-24 program year was $1,034,373, with approximately $318,231.37 in Program Income received during the program year. Carryover from previous years also contributed to the continued efforts of ongoing projects and programs. Overall, a total of $3,111,468.35 of CDBG and $165,176.61 of CDBG-CV funds were spent during the snapshot period of July 1, 2023, to June 30, 2024.

The HOME allocation for the 2023-24 program year was $573,200, with approximately $340,490.30 in Program Income. Carryover from previous years also contributed to the continued efforts of ongoing projects and programs, and the 2023-24 HOME expenditures were $34,769.78. Funds from the remaining 2023 HOME allocation, prior carryover, and accumulated program income at this time are set aside for construction of affordable rental housing projects and HOME CHDO projects.

The City of Merced allocated CDBG funds during the 2023-24 program year to social service agencies in order to address the community priorities and goals set forth in the Consolidated Plan for the 2020-2024 Strategic Plan period. Additionally, the City initially set aside CDBG funding for public facility and infrastructure projects in expectation of being able to achieve its infrastructure goals. However, over the program year, the 2023 Annual Plan was substantially amended two times, which removed almost all infrastructure and facility projects and replaced them with a project to purchase vacant land for an affordable housing project (Devonwood Apartments).

At the start of the 2023-24 program year, the City had recovered from the overlapping, mostly COVID-19, HUD, and staffing related delays experienced during the 2020, 2021, and 2022 program years, as explained in previous CAPER reports. The 2023 Annual Action Plan was submitted to HUD for approval on approximately June 20, 2023, and the City received fast HUD approval of the plan on August 28, 2023.

However, the unexpected departure of a staff member in July 2023 meant that the Housing Division was once again understaffed at the start of a program year, which bottlenecked workload, including the execution of subrecipient agreements that would enable the subsequent CAPER 3
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expenditure of CDBG funds.

Comparison of the proposed versus actual outcomes for each outcome measure submitted with the consolidated plan and explain, if applicable, why progress was not made toward meeting goals and objectives. 91.520(g) Categories, priority levels, funding sources and amounts, outcomes/objectives, goal outcome indicators, units of measure, targets, actual outcomes/outputs, and percentage completed for each of the grantee’s program year goals.

Goal Category Source /
Amount
Indicator Unit of
Measure
Expected
–
Strategic
Plan
Actual –
Strategic
Plan
Percent
Complete
Expected
–
Program
Year
Actual –
Program
Year
Percent
Complete
1A Improve
Public
Infrastructure
& Facilities
Non-Housing
Community
Development
CDBG: $
Public Facility or
Infrastructure
Activities other
than
Low/Moderate
Income Housing
Benefit

Persons
Assisted 20000 17900 89.5% 600 6460 1,076.67%
2A Increase
Owner
Occupied
Rehab
Opportunities

Affordable
Housing
CDBG: $
Homeowner
Housing
Rehabilitated

Household
Housing
Unit
15 0 0.00% 3 0 0.00%
2B Increase
Affordable
Housing
Opportunities
Affordable
Housing
CDBG:
$2,760,384
/ HOME: $

Rental units
constructed

Household
Housing
Unit

92 119 129.35% 156 0 0.00%
CAPER 4
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2B Increase
Affordable
Housing
Opportunities
Affordable
Housing
CDBG: $ /
HOME: $
Rental units
rehabilitated

Household
Housing
Unit
8 11 137.50%
2B Increase
Affordable
Housing
Opportunities
Affordable
Housing
CDBG: $ /
HOME: $
Homeowner
Housing Added

Household
Housing
Unit
1 0 0.00%
2B Increase
Affordable
Housing
Opportunities
Affordable
Housing
CDBG: $ /
HOME: $
Housing for
Homeless added

Household
Housing
Unit
30 30 100.00%
2C Provide
Assistance for
Supportive
Housing

Affordable
Housing
CDBG: $ /
HOME: $

Rental units
rehabilitated

Household
Housing
Unit
9 10 111.11%
2C Provide
Assistance for
Supportive
Housing
Affordable
Housing
CDBG: $ /
HOME: $

Housing for
Homeless added

Household
Housing
Unit

6 2 33.33%
3A Provide
Vital Services
for LMI
Families
Non-Homeless
Special Needs CDBG: $
Public service
activities other
than
Low/Moderate
Income Housing
Benefit
Persons
Assisted 2800 10010 357.50% 2820 4109 145.71%
CAPER 5
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3A Provide
Vital Services
for LMI
Families

Non-Homeless
Special Needs CDBG: $
Public service
activities for
Low/Moderate
Income Housing
Benefit

Households
Assisted
395 211 53.42% 60 150 250.00%
3A Provide
Vital Services
for LMI
Families

Non-Homeless
Special Needs CDBG: $ Homelessness
Prevention
Persons
Assisted
155 499 321.94% 261 179 68.58%
4A Provide
Homeless
Prevention &
Support
Services

Homeless CDBG: $
Public service
activities other
than
Low/Moderate
Income Housing
Benefit
Persons
Assisted 0 841 227 227 100.00%
4A Provide
Homeless
Prevention &
Support
Services
Homeless CDBG: $ Homeless Person
Overnight Shelter

Persons
Assisted
400 13 3.25%
4A Provide
Homeless
Prevention &
Support
Services

Homeless CDBG: $ Homelessness
Prevention

Persons
Assisted
50 0 0.00%
4A Provide
Homeless
Prevention &
Support
Services

Homeless CDBG: $ Other Other 200 0 0.00%
CAPER 6
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5 Enhance Fair
Housing
Knowledge and
Resources
Non-Homeless
Special Needs HOME: $
Public service
activities other
than
Low/Moderate
Income Housing
Benefit

Persons
Assisted 425 350 82.35%
Table 1 - Accomplishments – Program Year & Strategic Plan to Date

CAPER 7
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Assess how the jurisdiction’s use of funds, particularly CDBG, addresses the priorities and specific objectives identified in the plan, giving special attention to the highest priority activities identified.

The City of Merced’s 2020-2024 Consolidated/Strategic Plan identifies four Priority Needs, with associated goals, that the City has worked to address during the 5-year period it covers (July 1, 2020 – June 30, 2025):

1. Expand and Improve Public Infrastructure and Facilities Associated Goals: 1A - Improve Public Infrastructure & Facilities

2. Preserve and Develop Affordable Housing
Associated Goals: 2A - Increase Owner Occupied Rehab Opportunities; 2B - Increase Affordable Housing Opportunities; and, 2C - Provide Assistance for Supportive Housing

3. Public Services and Quality of Life Improvements
Associated Goals: 3A - Provide Vital Services for LMI Families; and, 5 - Enhance Fair Housing Knowledge and Resources

4. Homelessness Housing and Support Services
Associated Goals: 4A - Provide Homeless Prevention & Support Services During the 2023 Program Year, the fourth year of the Consolidated Plan, the City of Merced focused on the below-listed goals to address the above needs. After processing two Substantial Amendments, the final plan particularly focused on the need for affordable housing and expenditure of CDBG funds. Goal 2C(Provide Assistance for Supportive Housing) was not addressed during the 2023 program year, as there was not enough funding available to do so.
• Goal 1A – Improve Public Infrastructure & Facilities
• Goal 2A – Increase Owner Occupied Rehab Opportunities • Goal 2B – Increase Affordable Housing Opportunities
CAPER 8
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• Goal 3A – Provide Vital Services for LMI Families
• Goal 4A – Provide Homeless Prevention & Support Services • Goal 5 – Enhance Fair Housing Knowledge and Resources Program Year 2023 Use of Funds Towards Goals:

Direct and Indirect Administrative funds for both CDBG and HOME are spread amongst all goals each year in managing the overall program.

Goal 1A. Improve Public Infrastructure and Facilities:

After beginning the year with $1,165,122 of 2023 funding planned for public infrastructure projects, the final 2023 Annual Plan contained a total of $275,000 of CDBG funding for one public infrastructure project, including the design and contractor bidding process (amount also includes administrative costs spread to this goal as per above). The City intends to contribute local funds to this project, as well.

During the 2023 program year, the 2022 project that planned to install ADA sidewalk and ramp improvements in five South Merced neighborhood/mini parks was successfully completed. Its completion benefitted an estimated 6,460 nearby neighborhood residents.

Goal 2A. Increase Owner Occupied Rehab Opportunities:

The 2023 Annual Plan set aside $150,000 towards project costs for the second year of a three-year contract for Homeowner Occupied Rehabilitation activities through Habitat for Humanity Merced/Stanislaus County (HHMSC), and expected to assist approximately 3 homeowners by year-end. However, this program was not implemented during its intended first year, so accumulated expectations based purely on the amount of funding that had been allocated to it, was that six units would be rehabbed. However, HHMSC is still one of the organizations that has continued to assist County residents living in Planada with the January 2023 flood damages and until approximately mid-year, did not have its full staff capacity to handle both rehab/repair programs. The three year contract was approved by the City Council in September 2023.

Continued (1)
Goal 2B. Increase Affordable Housing Opportunities:

The 2023 Annual Plan set aside $211,750 of CHDO HOME reserves, which can be used towards rehabilitation or new construction of affordable CAPER 9
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rental units. Additionally, $4,403,129 of formula HOME funds for affordable rental units was set aside specifically for new construction.

During the program year, two Substantial Amendments were carried out that involved affordable housing. The first substantial amendment to the 2023 Annual Action Plan moved $2,612,845 of CDBG funds from multiple projects to Project #12, in support of the 156-unit Devonwood Apartments affordable housing project. The CDBG funds were planned to purchase the vacant land at the project site where the HOME-funded units would subsequently be built. The second substantial amendment was carried out to correct errors discovered in the amount of available funds that was initially presented in the first substantial amendment. Because this error overstated the amount of available funding, unfortunately this meant eliminating more projects from the Annual Action Plan.

At the beginning of May 2024, the Devonwood Apartments project successfully accomplished its financial closing of escrow with all investors and funding sources. The vacant land was purchased by the City with CDBG funds in April 2024 in anticipation of the looming financial closing, which would then allow the ownership transfer to the developer partnership and the project sponsor, Central Valley Coalition for Affodrdable Housing. Shortly after the escrow closing in May 2024, the project broke ground, with the first task being grading and ground preparation, and is currently under construction.

Goal 2C. Provide Assistance for Supportive Housing:

No funding for supportive housing projects was set aside in the 2023 Annual Action Plan.

However, during the 2023 program year, Sierra Saving Grace continued their rehab work on the three properties that were purchased with 2022 CDBG funding. As such, all four units were successfully completed during the program year and are now occupied by formerly/chronically homeless individuals and families.

The completed units also address Goal 2B above, by creating and providing more affordable rental unit options for low-income tenants.

Continued (2)
CAPER 10
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Goal 3A. Provide Vital Services for LMI Families:

The 2023 Annual Plan set aside $214,239 of CDBG funds for various public services projects, and City staff continued to work with the last of the subrecipient organizations that had been affected by previous years’ delays to wrap up programs.

Pre-2023 Programs completed under Goal 3A:

In the 2022 CAPER last year, the City reported accomplishments for overlapping 2021 and 2022 CDBG public service projects, including those by Symple Equazion, Alliance for Community Transformations, Harvest Time, and the Boys and Girls Club. Most of these programs were fully reimbursed and closed out early in program year 2023. Later in the program year, the Housing Division worked with the Boys and Girls Club to finalize and process the last reimbursements from their 2022 program year youth project. 2023 Programs completed under Goal 3A:

Harvest Time was successful in completing their 2023 Food 4 You program, assisting a total of 880 households and a total of 2868 people throughout the year with food distributions.

LifeLine Community Development Corporation (LifeLine CDC) successfully carried out its program to benefit residents of the Loughborough Area through workforce training, general outreach, information distribution, neighborhood cleanups, and afterschool childcare, assisting a total of 1241 households.

Sierra Saving Grace Homeless Project (SSG) successfully implemented a Subsistence Payments (Rental, Mortgage, and Utility Assistance) program in PY2023, assisting 20 households and benefitting 49 individuals by the end of the program year. The 2023 Annual Plan approved $35,500 to this program. However, like the 2022 program year, the CDBG funded short term rental/mortgage/utility assistance was in extreme high need this year and these funds were fully used up by the end of September 2023 – just three months into the program year.

The 2023 Project Sentinel Tenant and Landlord Counseling project was successfully carried out during the 2023 projgram year and assisted 130 households with tenant and landlord mediation and counseling services that helped resolve conflicts.

The 2023 Boys and Girls Club of Merced County’s planned project was not implemented by the organization.

CAPER 11
OMB Control No: 2506-0117 (exp. 09/30/2021)
Continued (4)
Goal 4A. Provide Homeless Prevention and Support Services:

The PY2023 Harvest Time project for operational cost support, as explained above in Goal 3A, also provided prepared meals to homeless individuals, delivered directly to local homeless individuals through a separate partnership with the Merced Rescue Mission. Approximately 227 unsheltered homeless individuals were provided this nutritional support in this manner (note: the number of individuals is obtained from the 2023 Homeless Point in Time count). Due to the nature of this aspect of their project, Harvest Time did not collect ethnicity or income data on the homeless individuals assisted.
$38,000 of CDBG funding was set aside in the 2023 Annual Plan to help fund a portion of staffing costs of the Merced County Human Services Agency, the agency that functions as the City and County Continuum of Care (CoC) Collaborative Applicant, whose purpose is the coordination, data tracking, and funding of regional homeless prevention and supportive service management programs countywide - more particularly within the City limits of Merced, where more than two-thirds (68%) of the countywide homeless population resides. Accomplishments are not reported for this project, as it uses a portion of City funding used for administrative and planning activities, which includes strategies to reduce homelessless within the City, and does not report beneficiary accomplishments. That being said, the 2024 Point In Time count conducted on January 25, 2024, of both sheltered and unsheltered homeless counted a total of 566 individuals living within the City boundaries. The entirety of this program is directed towards strategizing how CDBG, HOME, and even local funds could be used to benefit these individuals. Due to a vacant position in the Housing Division for most of the program year, staff was unable to get the agreement with the County executed before the end of the program year. However, the project is considered to have been completed by the end of the program year, and a reimbursement of eligible costs is currently pending and will be disbursed prior to September 30, 2024.

Continued (5)
Goal 5. Enhance Fair Housing Knowledge and Resources:

Fair Housing Services was provided by Project Sentinel, Inc. with $33,360 of HOME funding in the 2023 program year. During PY2023, Project Sentinel exceeded their annual goal for the number of people served through Intake and Referral services by assisting a total of 66 people. Over the courses of the year, they also surpassed their outreach goals in assisting another 147 city residents through direct outreach and opened four fair housing case investigations (goal of 8 cases). Additionally, Project Sentinel distributed a total of 2,914 pieces of educational materials, which CAPER 12
OMB Control No: 2506-0117 (exp. 09/30/2021)
includes both mailers and brochures, such as those distributed to and available from the Housing Division. Project Sentinel staff also attended Continuum of Care meetings this year and updated their website to streamline how tenants can access fair housing resources (website address:
https://www.housing.org/resources). Project Sentinel did experience the loss of two critical staff late in the program year, but have since hired replacements to be able to assist City of Merced residents during the 2024 program year and beyond. In fielding calls and concerns from residents, Project Sentinel reports a large trend in clients needing fair housing assistance based on their disability-related needs, as well as race and source-of-income complaints.

CARES Act Coronavirus Community Development Block Grant (CDBG-CV) Funds CAPER 13
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In December 2019, a new coronavirus known as SARS-CoV-2 was first detected in Wuhan, Hubei Province, Peoples Republic of China, causing outbreaks of the coronavirus disease COVID-19 that spread globally, with the first U.S. case reported in January 2020. In March 2020, the World Health Organization declared the coronavirus outbreak a pandemic, and national, state, and local emergencies were declared. The Coronavirus Aid, Relief, and Economic Security (CARES) Act in response to the crisis was signed into law by the President on March 27, 2020, which provided over $2 trillion of direct economic assistance for American workers, families, and small businesses, and for preservation of jobs.

As part of the CARES Act, additional assistance was provided for HUD grantees, and the City received CARES Act allocation of CDBG funds (CDBG- CV funds) in Rounds 1 and 3. In total, the City received $1,193,573 of CDBG-CV funds, and repurposed $125,239 of regular CDBG funds to be used towards combating the local effects of the pandemic and addressing immediate community needs that were identified through a public process. The City implemented four programs that addressed community COVID needs through the pandemic and beyond. The needs of very low- to low-income residents who are at risk of homelessness and who regularly experience food insecurity were amplified by the effects of COVID-19, especially workers employed by the types of businesses, such as restaurants/bars and personal service (gyms, hair and nail salons, etc.), that were the first to be affected by State-mandated closures and among the last to re-open.

With one of the four original CDBG-CV programs completed in PY2021, the three remaining-CV programs that continued through PY2022 were:
1). United Way of Merced County; Workplace Stabilization Program (Implemented August 2021) Activity: a) For-Profit Small Business Assistance (SBA); and b) Microenterprise Assistance Total Project Funding (Round 1 only): $500,000 Drawn by 6/30/2024: $226,855.88 Accomplishments: Expected: 50 businesses assisted Actual by 6/30/2024: 11 businesses and 46 employees assisted (full- and part-time jobs) Current Project Status: This project is continuing.

United Way began accepting applications for assistance from businesses in October of 2021 for reimbursement of eligible expenses dating to the start of mandated business shutdowns (March 2020). During PY2022, Unitied Way raised its $7,500 prior maximum assistance level to $30,000, as the prior level was determined by the City to be too low to meet some businesses' documented COVID related losses. United Way is currently re-processing some previously assisted businesses to re-evaluate their need for assistance at the new maximum levels as well as processing new applications. Due to the higher maximum now being applied and the waning of the Pandemic, funds will likely not assist the 50 businesses that CAPER 14
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were originally anticipated.

CDBG-CV Continued

CAPER 15
OMB Control No: 2506-0117 (exp. 09/30/2021)
2). Salvation Army; Merced Social Services Program (Implemented January 2021) Activity: Subsistence Payments/Rental, Mortgage, and Utility Assistance Total Project Funding (combined Rounds 1 and 3): $302,648 Drawn by 6/30/2024: $159,146.42 (however, $25,549.11 has been reimbursed in PY2024)
Accomplishments: Expected: 45 households Actual by 6/30/2024: 83 households (267 people) Current Project Status: This project is continuing, but will be ending December 31, 2024.

This program provides rental, mortgage principle and interest, and electric/gas utility payments assistance to landlords/mortgagors/providers for a maximum of six consecutive months, including the payoff of arrears with the first assistance payment. Salvation Army began assisting Merced City residents who have lost income due to COVID-related reasons in July 2021. The Salvation Army is required to coordinate with Sierra Saving Grace (below) to ensure that participants are not using both programs. Though the Pandemic is over, assistance was still available during the 2023 program year to provide COVID-affected Merced residents with vitally needed help to keep their housing and utilities in good standing.

However, as of the start of program year 2024, Salvation Army has chosen to end administering this program and has requested cancellation of their agreement with the City to run it.

3. Sierra Saving Grace; COVID Emergency Assistance Program (Implemented January 2021) Activity: Matrix Code 05Q; Subsistence Payments/Rental, Mortgage, and Utility Assistance Total Project Funding (combined Rounds 1 and 3): $316,164 Drawn by 6/30/2024: $207,150.90 Accomplishments: Expected: 50 households Actual by 6/30/2024: 56 households (158 people) Current Project Status: This project is continuing, but will be ending December 31, 2024.

This program provides rental, mortgage principle and interest, and electric/gas utility payments assistance to landlords/mortgagors/providers for a maximum of six consecutive months, including the payoff of arrears with the first assistance payment. In January 2021, Sierra Saving Grace CAPER 16
OMB Control No: 2506-0117 (exp. 09/30/2021)
began assisting Merced City residents who had lost income due to COVID-related reasons. Sierra Saving Grace also administers the non-COVID CDBG subsistence payments program listed and described elsewhere in this report. Sierra Saving Grace is required to coordinate with the Salvation Army (above) to ensure that participants are not using both programs. Though the Pandemic is over, the virus itself remains, and this assistance is still available to provide COVID-affected Merced residents with vitally needed help to keep their housing and utilities in good standing when a temporary loss of income due to the virus has occurred. This said, like the Salvation Army, Sierra Saving Grace has requested an early cancellation of the agreement to administer this program and will be ending assistance on December 31, 2024.

Due to the drastic slowdown in expenditure of CDBG-CV funds by all three of these subrecipients, the City of Merced is considering amending its use of -CV funds, switching from a standpoint of response to the COVID-19 pandemic to a standpoint of preparedness and planning - to be ready for the next pandemic, whenever it may come. This will entail a substantial amendment to the 2019 Annual Action Plan, to which the CDBG-CV funds were added in 2020 for both rounds of allocations.

Timely Expenditure of CDBG funds:

As reported in last year’s CAPER, at the start of the 2023 program year on July 1st, the Housing Division was still grappling with the payoff of a large CDBG loan in January 2021 by the Grove Apartments, and progress had been made during the Spring of 2023 on prior-year infrastructure projects that had previously been moving slower than expected. Because the City had unfortunately failed to meet its timeliness obligations with regards to the expenditure of CDBG funds by May 2nd, 2023, Housing staff began working with HUD on a month-to-month plan that mapped out deadlines and expectations for those expenditure over the 2023 program year and submitted this workout plan to HUD in late November 2023.

Included in the CDBG workout plan was a new strategy for expenditure of CDBG funding, which entailed undertaking a Substantial Amendment process that deleted 2023 CDBG projects, disencumbed 2020 and 2021 project funding, and moved $2,612,845 of CDBG funds to the Devonwood Apartments project that originally included only HOME funds for construction of units. The CDBG activity associated with the project would assist developers with CDBG funding to acquire the vacant land that the project needed. A second and related Substantial Amendment was also processed shortly after the first substantial amendment was approved to correct a calculation error that was discovered during the first amendment process which erroneously overstated the amount of CDBG funds available. This second amendment unfortunately necessitated the deletion of more 2021, 2022, and 2023 projects in order to balance available funding to planned projects.

On March 21, 2024, the acquisition of the land for the Devonwood Apartments closed escrow and, as such, City of Merced successfully CAPER 17
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expended a total of $2,612,845 of CDBG funds on this activity. After funds were drawn down from HUD in mid-April 2024, the City successfully met its timeliness obligation for program year 2023 with an ratio of 1.12% (adjusted to include 2023 program income), far under the 1.5% maximum ratio allowed.

CAPER 18
OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-10 - Racial and Ethnic composition of families assisted Describe the families assisted (including the racial and ethnic status of families assisted).

91.520(a)

CDBG HOME
White 1,845 2
Black or African American 286 1
Asian 37 0
American Indian or American Native 72 0
Native Hawaiian or Other Pacific Islander 6 0
Total 2,246 3
Hispanic 1,213 1
Not Hispanic 1,841 2
Table 2 – Table of assistance to racial and ethnic populations by source of funds

Narrative
Please note that the above numbers do not reflect the 808 individuals assisted with CDBG funds who identify as "Other Multi-Racial.” These individuals are, however, included in the Hispanic/Not Hispanic totals above (total of 3,054 individuals reported).

An additional 1,241 households living in the Loughborough area, whose race and ethnicities were not directly recorded, were served by the PY2023-24 LifeLine CDC program. Race and ethnicity data in this area of the city is tracked using the 2020 Census data collected for the area served by the program (Census Tracts 10.03 and 10.04).

Of the programs that were implemented and closed out prior to the end of the Fiscal Year, the Housing Division and its public service partners was able to provide funding to assist or benefit approximately 3,054 individuals in 907 households through Public Service and Acquisition and Rehabilitation program funding (not including administrative fund projects or the previously mentioned LifeLine program).

The City provided HOME administrative funding to Project Sentinel, Inc., for Fair Housing Services, which assisted another 217 individuals with housing discrimination case investigation, information/outreach, and intake/referrals, and distributed a total of 2,914 educational mailers and brochures to city residents in targeted LMI areas.

The Merced City and County Continuum of Care, which provided assistance to approximately 571 Point- In-Time (PIT) homeless individuals, both sheltered (344) and unsheltered (227), that were assumed to still be residing in the City of Merced at the start of the 2023 program year in July 2023 (counted February 23, 2023). The 2024 count performed on January 25, 2024, revealed a very slight decrease in CAPER 19
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the total number of homeless in the City (of 566 total, 369 were sheltered, 197 unsheltered). This statistics are encouraging, as the number of unsheltered individuals decreased by 13 percent. Some of these individuals can assume to be assisted through CDBG funding to two Acquisition programs, which typically creates permanent housing for those counted in transitional shelters or families with children living on the streets, as well as by the Harvest Time food distribution program that delivered meals directly to homeless encampments throughout the City. The decrease in unsheltered individuals may also be attributed to the non-HUD assisted Twelve Thirteen CA HCD Homekey project, which created 95 permanent supportive units from a former motel.

The populated data is not reflective of projects that were not implemented and/or closed out this fiscal year, projects currently underway or nearing completion, units acquired but not yet occupied, or other non-HUD funded housing projects. These accomplishments will be reported in the 2024 CAPER next year.

Most notably reflected in the accomplishments above is the Sierra Saving Grace Acquisition/Rehab project, which purchased a total of four units with their PY2022 funding, but completed rehab activities and occupied the units with formerly homeless tenants during the 2023 program year.

CAPER 20
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CR-15 - Resources and Investments 91.520(a)
Identify the resources made available
Source of Funds Source Resources Made
Available
Amount Expended
During Program Year
CDBG public - federal 3,507,558 3,111,468
HOME public - federal 4,672,199 34,469
Table 3 - Resources Made Available

Narrative
The City of Merced received $1,034,373 in 2023 Community Development Block Grant (CDBG) and $573,200 in 2023 HOME Investment Partnership (HOME) formula funds. Over the program year, through monthly payments and complete payoff of existing rehabilitation and first time homebuyer loans of CDBG and HOME funds by city residents holding the loans, $318,231.37 in CDBG funds and $340,490.30 in HOME funds were received as program income.

The City has taken no action to hinder the implementation of the 2023 Annual Action Plan, has strived to continue to monitor the progress of all projects and programs, and has implemented new projects and programs that continue to work toward achieving its goals and objectives and meeting the needs of residents.

Identify the geographic distribution and location of investments Target Area Planned
Percentage of
Allocation
Actual
Percentage of
Allocation
Narrative Description
City Wide 8 3.98
The City allocated approximately 92 percent of its
CDBG and HOME funds to projects within specific
low income census tracts.

Table 4 – Identify the geographic distribution and location of investments

Narrative
For the 2023 program year, after the second substantial amendment, Merced anticipated that at least

92.02 percent of its CDBG and HOME allocations would be spent reaching the 80 percent Area Median Income (AMI) disadvantaged census tracts (HUD Income Eligible Census Tracts), and approximately 8% would serve City residents city wide. The City is still on track to closely reach this goal, however, as not all of the reimbursements planned have been fully processed through the City’s financial system.

Approximately three-fourths of the city is within one of the HUD Income Eligible Census Tracts. As stated in the Strategic Plan, certain racially and/or ethnically concentrated areas of poverty were identified as CAPER 21
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having greater needs in the City.

Each year, a small number of Merced's subrecipients provide services and housing to residents living in the eligible census tracts, including Harvest Time (food distribution center) and Lifeline CDC (employment training). The City originally planned public facility and infrastructure projects and improvements were within these areas. However, most of these CDBG funds were reprogrammed through both Substantial Amendments towards the Devonwood Apartments project.

Some of the remaining funds were targeted to the general population; however, because Merced is a relatively smaller community and low-income populations are distributed throughout, the City of Merced believes that those activities outside these census tracts will still serve low-income populations.

CDBG income-eligible Census Tracts now occupy most of the total census tracts in the City: Tracts 10.03,

10.04, a portion of 10.05, 13.01, 13.02, 14.01, 15.02, 15.03, 16.01, and portion of tract 17.00.

The City of Merced as a whole also contains more than 51% LMI residents.

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Leveraging
Explain how federal funds leveraged additional resources (private, state and local funds), including a description of how matching requirements were satisfied, as well as how any publicly owned land or property located within the jurisdiction that were used to address the needs identified in the plan.

The City is dedicated to leveraging its funds towards increasing the number of affordable housing units available to City residents.

The City is currently in discussion with several affordable housing developers to begin the early stages of leveraging its HOME, annual CA Permanent Local Housing Allocation (PLHA) allocations, Council appropriated Housing Opportunity Set-Aside Fund (similar to a Housing Trust Fund), and remaining American Rescue Plan Act (ARPA) U.S. Treasury funding allocations towards new affordable housing projects. Additionally, the City also has HOME-ARP funds, which are conditionally reserved for the Mercy Village affordable housing project on Park Avenue.

Additionally, the City leveraged some of its CDBG planning activity funds to the City and County of Merced Continuum of Care program’s Collaborative Applicant, to support eligible costs of data collection and formulating strategies for homelessness planning for the City’s homeless populations.

The City is also in various stages of leveraging its Housing Successor Agency properties towards the affordable housing needs of the community, by disposing those properties to affordable housing developers, namely: Fuller Center for Housing of Merced County, Certified Containers 915, and Linc Housing.

All Participating Jurisdictions (PJs) receiving HOME funds, like the City of Merced, must contribute or match no less than 25 cents for each dollar of HOME funds spent on affordable housing. As PJs draw funds from HOME, they incur a match liability, which must be satisfied by the end each federal fiscal year. This being said, the HOME statute provides for a reduction of the matching contribution requirement under three conditions: 1) fiscal distress; 2) severe fiscal distress; and 3) for Presidentially declared major disasters covered under the Stafford Act.

When a local jurisdiction meets both distress criteria in 24 CFR 92.222, it is determined to be in severe fiscal distress and receives a 100% reduction of match. Individual poverty rate and per capita income (PCI) are based on data obtained from the latest American Community Survey (ACS) estimates from Census data. In 2022, for a jurisdiction to qualify as distressed based on the poverty criterion, its percentage persons in poverty must have been at least 17.96% , and to CAPER 23
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qualify as distressed based on the PCI criterion, its average PCI must have been less than $24,306. With a 2022 estimated poverty rate of 29.75% and a PCI of $20,363, the City of Merced’s match is reduced 100 percent for fiscal years 2022 and 2023. Additionally, with a Federal Declaration of Major Disaster declared in January 2023 due to storm-related flooding, the City requested a reduction of the HOME Match funds under the third criteria (24 CFR

92.222(b)) for years 2023 and 2024.

Fiscal Year Summary – HOME Match

1. Excess match from prior Federal fiscal year 25,393,312.00

2. Match contributed during current Federal fiscal year 0 3 .Total match available for current Federal fiscal year (Line 1 plus Line 2) 25,393,312.00

4. Match liability for current Federal fiscal year 0

5. Excess match carried over to next Federal fiscal year (Line 3 minus Line 4) 25,393,312.00 Table 5 – Fiscal Year Summary - HOME Match Report

CAPER 24
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Match Contribution for the Federal Fiscal Year
Project No. or
Other ID
Date of
Contribution
Cash
(non-Federal
sources)
Foregone
Taxes, Fees,
Charges
Appraised
Land/Real
Property
Required
Infrastructure
Site
Preparation,
Construction
Materials,
Donated labor
Bond
Financing
Total Match
n/a n/a n/a n/a n/a n/a n/a n/a n/a
Table 6 – Match Contribution for the Federal Fiscal Year

HOME MBE/WBE report
Program Income – Enter the program amounts for the reporting period Balance on hand at begin-
ning of reporting period
$
Amount received during
reporting period
$
Total amount expended
during reporting period
$
Amount expended for
TBRA
$
Balance on hand at end of
reporting period
$
2,867,104.79 340,490.30 0 0 3,207,595.09
Table 7 – Program Income

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Minority Business Enterprises and Women Business Enterprises – Indicate the number and dollar value of contracts for HOME projects completed during the reporting period Total Minority Business Enterprises White Non-
Hispanic Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black Non-
Hispanic
Hispanic
Contracts
Number 0
Dollar
Amount
0 Sub-Contracts
Number 0
Dollar
Amount
0 Total Women
Business
Enterprises
Male
Contracts
Number 0
Dollar
Amount
0 Sub-Contracts
Number 0
Dollar
Amount
0 Table 8 - Minority Business and Women Business Enterprises

Minority Owners of Rental Property – Indicate the number of HOME assisted rental property owners and the total amount of HOME funds in these rental properties assisted Total Minority Property Owners White Non-
Hispanic Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black Non-
Hispanic
Hispanic
Number 0
Dollar
Amount
0 Table 9 – Minority Owners of Rental Property

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Relocation and Real Property Acquisition – Indicate the number of persons displaced, the cost of relocation payments, the number of parcels acquired, and the cost of acquisition Parcels Acquired 0
Businesses Displaced 0
Nonprofit Organizations
Displaced

Households Temporarily
Relocated, not Displaced

Households
Displaced
Total Minority Property Enterprises White Non-
Hispanic Alaskan
Native or
American
Indian
Asian or
Pacific
Islander
Black Non-
Hispanic
Hispanic
Number 0
Cost 0
Table 10 – Relocation and Real Property Acquisition

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CR-20 - Affordable Housing 91.520(b)
Evaluation of the jurisdiction's progress in providing affordable housing, including the number and types of families served, the number of extremely low-income, low-income, moderate-income, and middle-income persons served.

One-Year Goal Actual
Number of Homeless households to be
provided affordable housing units 0 0
Number of Non-Homeless households to be
provided affordable housing units 150 26
Number of Special-Needs households to be
provided affordable housing units 30 0
Total 180 26
Table 11 – Number of Households

One-Year Goal Actual
Number of households supported through
Rental Assistance 20 20
Number of households supported through
The Production of New Units 156 0
Number of households supported through
Rehab of Existing Units 3 6
Number of households supported through
Acquisition of Existing Units 0 0
Total 179 26
Table 12 – Number of Households Supported

Discuss the difference between goals and outcomes and problems encountered in meeting these goals.

The above goals and actuals are reconciled as explained below:

1. Provision of Affordable Housing:
a. Number of Homeless households:

The City did not assist any homeless households with housing in program year 2023.

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b. Number of Non-Homeless households:
• Habitat for Humanity of Merced/Stanislaus Counties – at the beginning of the program year, 1 LMI homebuyer was expected to be assisted through supplemental funding to assist completion of a single family rehab project. This project was deleted with the second substantial amendment to the plan, but the unit was not removed from this table (-1) • Sierra Saving Grace completed 2023 rental, mortgage, and utility assistance program, assisting 20 households retain their permanent housing (+20 units) • Sierra Saving Grace Homeless Project – 6 rental units completed remaining rehab work from prior-year acquisition and were occupied during the 2023 program year (+6 units) • Habitat for Humanity of Merced/Stanislaus County – 0 homeowner occupied rehabilitation projects completed (-3)
• Affordable Rental Housing – the 156 units associated with the Devonwood Apartments project will not complete and occupy the units until approximately early spring of 2026. The 2023 AAP estimated that 30 of the units would be set aside for special needs or at-risk households. These units will be added to the 2025 AAP, the program year they are expected to be occupied (-126) c. Number of Special-Needs households:
• Affordable Rental Housing – the 2023 AAP planned 30 units of the Devonwood Apartments project to be set aside for special needs, formerly homeless, or at-risk households. These units will be added to the 2025 AAP, the program year they are expected to be occupied (-30)

2. Households Supported Through Project Types:
a. Rental/Mortgage and Rental Deposit Assistance:
• Short term Emergency Rental/Mortgage/Utility Assistance - Sierra Saving Grace Homeless Project: 20 households
• Coronavirus rental/mortgage/utility projects are discussed further below b. Production of New Units:
• Affordable rental housing construction – the Devonwood Apartments will not complete construction and occupy the 156 units until sometime in program year 2025. This expected accomplishment will be moved to that program year.
c. Rehab of Existing Units:
• Sierra Saving Grace Homeless Project completed all rehabilitation work and found tenants for the six units that had been purchased with prior year funds. These were purchased in program years 2020 (one unit; converted garage), 2021 (one unit), and 2022 (four units).

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• Habitat for Humanity Merced/Stanislaus Counties – 0 units rehabilitated (-3) d. Acquisition of Existing Units:
• There were no projects planned during program year 2023 that acquired existing units. Vacant land was purchased with CDBG funding for the Devonwood Apartments project.

Discuss how these outcomes will impact future annual action plans.

1. Provision of Affordable Housing:

Homeless: Not applicable.

Non-Homeless:
• Habitat for Humanity’s OOR program begin September 2023 and uses 2022 and 2023 funding.

Currently, there are two homeowners that are planned to be assisted during the 2024 program year. These accomplishments will be reported in the 2024 CAPER. • The 156 unit Devonwood Apartments project is currently under construction and is expected to be completed in approximately Fall or Winter of 2025, or early spring of 2026. As such, these units will be reported when occupied, likely not until the 2025 or possibly 2026 CAPER.

Special Needs:

Any new projects to benefit special needs households will be reported in subsequent CAPER reports.

This includes any special needs units associated with the Devonwood Apartments project.

2. By Project Type:

Rental Assistance: no affect
Production of New Units: please see above – accomplishments deferred to 2025 or 2026 CAPER Rehab of Existing Units: Habitat for Humanity rehab projects will appear in the 2024 and 2025 CAPERs.

Acquisition of Existing Units: no affect – there are no acquisition projects remaining to complete rehab work (all caught up from COVID overlapping years)
Homeowner assistance: none with HUD funds (the City runs a FTHB program with Self-Help Enterprisess using State funding; not included in this report)

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Include the number of extremely low-income, low-income, and moderate-income persons served by each activity where information on income by family size is required to determine the eligibility of the activity.

Number of Households Served CDBG Actual HOME Actual
Extremely Low-income 2395 3
Low-income 444 0
Moderate-income 155 0
Total 2994 3
Table 13 – Number of Households Served

Narrative Information
In Tables 11 and 12 above, HUD requires only those figures for affordable housing rental units (none), acquisition with rehab (Sierra Saving Grace), homeownership assistance (none), and rental assistance programs (Sierra Saving Grace CDBG program only) be included.

CDBG funds were used for activities benefitting low/mod persons and were in compliance with certifications that require no less than 70% of CDBG funding during the specified period on activities that benefit low/mod person.

During the 2023 program year, approximately 98.13% of CDBG funding was directed towards LMI households and persons.

Additionally, included in the Attachments is the PR23 reports for both CDBG and HOME, which reflect Matrix Code, Accomplishment Type, Beneficiaries by Income Category, which include census for persons, and Units.

Not reflected in this table are CDBG & HOME projects still underway, CDBG activities that benefit residents living in HUD Eligible Low/Mod Census Tracts of the City, all CDBG-CV projects (business/microenterprise assistance and rental/mortgage/utility assistance), Continuum of Care support, and fair housing services.

Additional 2023 Low-Mod Accomplishments - CDBG
Harvest Time (Food Distribution) - people: 2329 Extremely Low (0-30% AMI); 366 Low-Mod (31-50% AMI); 137 Moderate (51-80% AMI); 36 Non-Low Moderate (81-100% AMI)

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Other Low-Mod Accomplishments - CDBG-CV (total to date) Sierra Saving Grace (rental/mortgage/utility) - households: 44 Extremely Low (0-30% AMI); 10 Low-mod (31-50% AMI);1 Moderate (51-80%); 1 Non-Low Moderate (81-100% AMI) Salvation Army (rental/mortgage/utility) - people: 48 Extremely Low (0-30% AMI); 26 Low-mod (31-50% AMI);8 Moderate (51-80%); 1 Non-Low Moderate (81-100% AMI) United Way (Businesses/Microenterprise) - employees: 50 Extremely Low (0-30% AMI); 18 Low-Mod (31-50% AMI)

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CR-25 - Homeless and Other Special Needs 91.220(d, e); 91.320(d, e); 91.520(c) Evaluate the jurisdiction’s progress in meeting its specific objectives for reducing and ending homelessness through:

Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs
The City relies on its partnerships developed through the Continuum of Care and non-profit organizations (CDBG-funded Public Service activities) to reach out directly to homeless individuals in need of these services.

Among others, the following standout positive outcomes helped to direct resources towards homeless programs and activities:
• The Sierra Saving Grace Homeless Project acquisition with rehabilitation program was able to successfully complete all outstanding rehab projects and house families and individuals using 2022 funds by the end of the 2023 program year. The acquired and rehabbed homes were rented to either case-managed formerly homeless or to very- to moderate-income families and individuals.
• A total of 49 individuals in 20 households received emergency rental, mortgage, or utility payment assistance through Sierra Saving Grace's CDBG assistance program to prevent homelessness (non-COVID).
• The City of Merced provided the City and County Continuum of Care Collaborative Applicant (Merced County Human Services Agency) planning activities funding support in strategizing homeless support and prevention programs within the City Limits, for sheltered and unsheltered individuals.
• Harvest Time continued to provide meals to homeless individuals throughout the program year through a collaboration with Merced Rescue Mission.

Additionally, the City of Merced participates in the Merced City and County Continuum of Care’s Coordinated Entry (CE) system, which is linked to a wide range of public & private agencies through street outreach within the CoC jurisdiction, so that people sleeping on the streets are prioritized for assistance in the same way as all other homeless persons.

CoC advertises the CE process in ways that include: 1) leaving business cards of outreach workers; 2) leaving flyers that describe the process and include contact information; 3) leaving information at service sites; 4) leaving information at public locations; 5) educating mainstream service providers; 6) at events that attract homeless persons; 7) navigation center; 8) 2-1-1 help line; and 9) meal programs at centers and parks.

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Addressing the emergency shelter and transitional housing needs of homeless persons The City of Merced participates in the Merced City and County Continuum of Care which is linked to a wide range of public & private agencies working together to address emergency and transitional housing needs of homeless persons.

This past year, the City of Merced collaborated with the following organizations to provide immediate shelter to chronically homeless individuals or individuals at-risk of becoming homeless:
• Sierra Saving Grace - Rental and Utility Payment Assistance • Merced County - COC Collaborative Applicant for homelessness strategies The City worked with Sierra Saving Grace to assist 20 households with rental and utility payment assistance to help them pay their late rent or mortgage and utility bills. This helped these families avoid eviction or foreclosure and/or gas and electricity shut-off due to nonpayment, which would have resulted in loss of their basic means to cook meals or heat and cool their homes, crucial in summer temperatures that regularly reach over 100 degrees for days at a time.

Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are: likely to become homeless after being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, foster care and other youth facilities, and corrections programs and institutions); and, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs The County-wide Continuum of Care's homeless prevention strategy was implemented to help identify specific risk factors based on fact-finding with general assistance, mainstream, and prevention assistance providers that include loss of income, history of residential instability, sudden death or illness, utility shutoffs, etc.

A strategic step of the prevention strategy focuses on shelter diversion by stabilizing the households in current housing or by temporarily sharing housing with other family members or friends until the household is ready to obtain and maintain permanent housing.

Steps also include links to temporary or ongoing support and case management, if needed. Temporary support may include one-time or short-term rental and/or utility assistance and participation in employment services. Ongoing supports may include mainstream resources and job training. Case management, if desired by the household, may be short-term.

The overall goal of the homeless prevention strategy is to stabilize the household and prepare a plan if another housing crisis occurs.

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In addition, the Merced County Rescue Mission operates a Respite Care program that focuses on helping homeless persons discharged from local hospital and healthcare facilities. The Respite Care program offers such persons a safe and supportive environment, as well as meals and oversight of medical treatment, while helping them explore long-term housing options through case management.

For the past three years, the City has supported LifeLine Community Development Corp.'s "Empower Loughborough Community" program. The program was implemented with 2019 CDBG funds (however, it started slowly due to the Pandemic), and LifeLine plans to expand the program to other nearby apartment complex communities in the Loughborough area. The program focuses on residents living in Census Tract 10.03 and 10.04, both Qualified Census Tract that have a large percentage of low-income families and higher crime, by providing them with job skills, mentorship, personal finance training, and childcare, that will eventually enable them to lift themselves out of systemic poverty.

While initially categorized as a Neighborhood Cleanup activity, Restore Merced's "Restore Jobs" transitional employment program initially got its start from 2018 and 2019 CDBG funds, providing homeless or formerly incarcerated men with jobs, mentorship, and case management during their work in cleaning up certain LMI Census Tracts in the City, removing over 60 tons of trash and bulky debris within the 2019 program year alone. Beginning in the Spring of 2020 and still today, the City now contracts independently with Restore Merced using its Solid Waste Enterprise Funds through its Public Works Department to maintain its downtown and creek areas, enabling the organization to continue employing, mentoring, and training these individuals, as well as assisting them in finding other employment. Since its inception, Restore Merced has consistently seen its former employees successfully progress to mainstream jobs and positive lives.

Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again
By partnering with the Merced City and County Continuum of Care to strategize homelessness in the City, helping homeless persons includes:
• Focusing more intensely on chronically homeless individuals and families through street outreach, and engagement into areas and encampments where chronically homeless persons are known to live;
• Engaging chronically homeless households through the Coordinated Entry System, to help link them to the appropriate permanent supportive housing provider and level of supportive services;
• Increasing resources to provide bridge housing for chronically homeless households who need a CAPER 35
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short-term stay while awaiting permanent housing availability that includes low-barrier shelter and vouchered stays in motels;
• Connecting chronically homeless households to mainstream resources, including Medi-Cal and behavioral health services while awaiting PSH placement; • Connecting chronically homeless households to community resources such as food, transportation, money management, housing counseling services, etc., to ensure they maintain their housing; and,
• Emphasizing a consumer-driven mindset that is choice-based.

The Coordinated Entry System (CES) plays a critical role in providing the right intervention for each homeless family to effectively house them within 30 days. CES helps families avoid entering shelters by offering assistance to help them remain in their housing or live with friends and families for a short period of time in order to gain time to move into permanent housing. If emergency shelter is needed, rapid rehousing assistance and supportive services are provided to help ensure a stay of no more than 30 days. Services are provided within a housing first and low-barrier environment. Assistance is flexible, so that families with lower barriers receive modest financial assistance and those with higher barriers receive moderate assistance.

The Continuum of Care has also developed more effective coordination between prevention efforts and mainstream benefits and programs.

Merced County Regional Homeless Plan
In 2019, the City and County began work on a Regional Homeless Plan that would bring coordination of jurisdictions county-wide to address concerns associated with homelessness and the homeless population. The concept first began with State Assemblyman Adam Gray's ability to obtain funds for facility improvements in the County and grew from conceptual meetings between regional leaders to potential fruition of the concept, with CA Governor Gavin Newsom's willingness to support regional solutions for homelessness in the State budget. The County's conceptual plan also includes the County's Continuum of Care program and business owners within the County.

The County Regional Homeless Plan includes a housing-first concept that increases low-barrier temporary and permanent housing under the following purposes and principles: 1) establish and enlist measurable objectives; 2) strategic and efficient use of State and Federal funds across jurisdictions; 3) create client-focused best practices that serve the individual, not just the program. Key objectives of the Plan include outreach and engagement and development and expansion of housing resources and opportunities (Housing First, Navigation Center, interim housing, permanent housing, and long-term supportive housing).

System Support and Proposed Actions include: 1) Identify and categorize all available funding for services across agencies; 2) Develop multi-agency teams to engage individuals experiencing homelessness; 3) Develop a housing inventory or registry program to aid in expediting placements using CAPER 36
OMB Control No: 2506-0117 (exp. 09/30/2021)
vouchers; 4) Update the Coordinated Entry System (CES) and Homeless Management Information System (HMIS) to enhance assessment tools and collect data more effectively; 5) Implement a Homeless Court aimed at addressing chronic cases; and, 6) Enhance case management efforts to achieve independence.

Homeless Court Program
In March of 2020, the Merced City Council approved a Homeless Court Memorandum of Understanding among the County of Merced District Attorney's Office, County of Merced Public Defender's Office, Public Defender Firm Ciummo and Associates, the Superior Court of California/Merced County, and the City of Merced to establish the Homeless Court Program (HCP), a collaborative court that provides homeless and formerly homeless individuals with an opportunity to resolve outstanding eligible pre- and post-judgement criminal cases and/or infractions, in the interest of promoting public and individual safety and self-sufficiency. The HCP addresses the unique needs of the homeless population's legal challenges, which hinder an individual's ability to re-establish themselves into society. The HCP is designed to reward eligible individuals who have made significant progress in improving their situation through participation in a treatment program with access to additional community and court resources.

Examples of eligible program service activities include behavior health and recovery services, employment or employment training services, individual counseling, chemical dependency meetings, or other like activity approved by the Homeless Court Coordinator. Eligible cases for the HCP include both infraction and misdemeanor traffic and criminal fines.

The City Manager and City Attorney's Office staff provide staff support to the Homeless Court on behalf of the City of Merced, and Merced County provides the coordinator duties by facilitating and implementing the administrative functions of the program.

CAPER 37
OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-30 - Public Housing 91.220(h); 91.320(j)
Actions taken to address the needs of public housing
The Housing Authority of Merced County (HAMC) is the public housing agency serving those needs within the City of Merced. HAMC is independent of the City of Merced, and the City retains no control or decision-making over its funding, voucher programs, or implementation of programs. HAMC owns multiple public housing properties in Merced. The City does not own any public housing.

In May 2023, the HAMC opened several different waiting lists to begin accepting online preapplications from potential tenants for Project Based Vouchers (PBV), Public Housing (PH), and Housing Choice Vouchers (HCV) programs. Though an online process, applicants with disabilities could contact HAMC to request reasonable accommodations assistance. These vouchers will assist low-income tenants as units become available, and especially, as new units are constructed by the City's HOME funding, local and state funding sources, and private developers in the next years.

In July 2024, the Authority began accepting online pre-applications in order to fill waitlists for Project Based Program (PBV) and Public Housing (PH) voucher programs. The lists were opened for ten projects countywide, and four of the projects are in Merced City. The waiting list application period closed on August 19, 2024. Residents could enlist the assistance of two partnering agencies, Turning Point/New Direction and Healthy House Within A Match for help with the application process, and the Merced County Library offers free daily public access to computers to access the internet.

The City of Merced continues to work closely with non-profit organizations who, in association, work closely with HAMC to provide assistance to low-income families in the development of housing projects in Merced. In this connection, the City and HAMC each strive to address the public housing needs of the community, though our combined funds are insufficient to address the extent of the affordable housing crisis.

The Housing Authority provides and manages the Housing Choice Voucher program, formerly known as Section 8. Due to the lack of available units and the community’s low vacancy rate, many voucher recipients still experience difficulty finding and securing housing.

The success of the HAMC assistance within the City of Merced continues to hinge on the shortage of available units, and the lack of affordable, decent housing is a major issue in Merced County as a whole.

Developing enough affordable housing in the jurisdiction to meet the need is a huge challenge for stakeholders seeking to improve the quality of life for a large sector of our population.

The City is working with affordable housing developers to partner with in creating more affordable rental units within the next one to five years with voucher assistance from HAMC.

CAPER 38
OMB Control No: 2506-0117 (exp. 09/30/2021)
Actions taken to encourage public housing residents to become more involved in management and participate in homeownership
The Housing Authority of Merced County (HAMC) encourages residents to participate in policy, procedure, and program implementation and development through its Board, particularly focusing on self-sufficiency and enhancing the quality of one's own life. HAMC connects residents and participants to services, activities, and other organizations that promote that vision. There are community and network center partnerships for residents to utilize, including public computer centers. On the HAMC website, residents can locate relevant services and service providers in dedicated resident and resident services sections. Additionally, HAMC distributes information via webpage and mail-outs to participants about the status of its programs and residents for current and future participants, relevant news, information on training and employment opportunities, and other community resources available. Public housing residents also participate in the development of the HAMC five-year and annual plans. The HAMC distributes a survey to prioritize residents’ needs and schedule short- and long-term improvements.

Actions taken to provide assistance to troubled PHAs
The Housing Authority of Merced County (HAMC) is not designated as troubled.

CAPER 39
OMB Control No: 2506-0117 (exp. 09/30/2021)
CR-35 - Other Actions 91.220(j)-(k); 91.320(i)-(j)
Actions taken to remove or ameliorate the negative effects of public policies that serve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment. 91.220 (j); 91.320 (i) City of Merced Housing staff continues to move forward to meet the daily challenges and has worked to educate subgrantees, identify challenged areas, establish community partnerships, and improve upon outdated processes to create an efficient, effective program. With a meagerly staffed division, the work is always uphill, but deeply entrenched in a focused mission to assist Merced residents and improve living conditions for the most vulnerable, while administering funding responsibly and ethically.

The Housing Program continues to service existing First Time Homebuyer Program (FTHB) loans funded by the previous-year HOME program funds, Neighborhood Stabilization Program (NSP) funds, and previous-year CalHome funds.

The City was awarded $2.5 million of 2021 CalHome Program funding from the State of California Housing and Community Development (HCD) on April 19, 2022. This amount is split towards the following activities and amounts: 1) homeowner occupied rehabilitation - $1,375,000; and 2) first time homebuyer for mortgage assistance - $1,125,000. The City enlisted the partnership of Self-Help Enterprises for their expertise in both applying for and managing the programs post-award. Since 2017, we have maintained a waiting list of potential applicants who we have determined to be preliminarily income-qualified, and Self-Help Enterprises has prioritized these residents in beginning the program.

Additionally, we still expect to be able to fund a handful of new loans during the 2024 program year from a small pool of program income that has accumulated over time from payments received on existing loans that we continue to administer.

In February 2020, the City received an award of State SB2 Planning Grant Program funds that funded planning activities directed at accelerating the production of new housing units in the City. These funds were directed towards several activities, including updating the Accessory Dwelling Units (ADU) Ordinance, developing pre-approved ADU and duplex plans to streamline permitting processes and encourage the construction of housing units by home and landowners, and to strategize use of permanent Local Housing Allocations (PLHA) funds towards activities that reduce the cost and policy barriers for residents.

In June 2021, the City received an award of $300,000 by the CA HCD Local Early Action Planning Grants Program (LEAP) that has assisted us in examining and updating ordinances and policies that may have historically and unintentionally served to limit the development of affordable housing.

In the 2022 program year, the City restarted its Homeowner Rehabilitation program with Habitat for CAPER 40
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Humanity Merced/Stanislaus County to benefit low-income homeowners, although it was not implemented until September 2023. These homeowners, while able to pay their mortgages and taxes, are sometimes not able to afford large or even small-scale repairs to maintain the home itself over time.

The program removes the financial barriers of those repairs by providing a low-interest loan that is forgivable after 15 years of continued owner occupancy.

Actions taken to address obstacles to meeting underserved needs. 91.220(k); 91.320(j) The 2023 Annual Action Plan identified the lack of funding resources that fully address all the needs of target-income residents as one of the primary obstacles in meeting underserved needs. One way to combat this is to encourage programs that produce the most widespread benefit, and another is to partner with other agencies and non-profit organizations to pool resources that attain the same or similar goals. Another identified obstacle is the location of services for those that need access to them.

The City of Merced Housing Division has partnered with the Merced County Human Services Agency as Collaborative Applicant to identify planning strategies that the Continuum of Care program can oversee within the City of Merced and County of Merced jurisdictional lines. Almost three-fourths of Merced County¿s homeless reside within the city limits. Through the Annual Plan, the City of Merced continues to provide CDBG planning activity funding to support staff costs of the Merced County Human Services Agency¿s Collaborative Applicant homelessness planning role. Several positive activities identified by the Continuum of Care can be found throughout this document and past year performance reports.

In 2011, the City and County of Merced took a lead role in providing resources to the homeless in Merced and the County outlying areas and smaller communities by adopting the 10-Year Strategy to End Homelessness. The plan discussed the extent of homelessness in Merced County, recommended best practices, identified potential local resources, described solutions, and ultimately rendered area organizations eligible for federal Continuum of Care grant funding. The City intentionally supports and complements the goals of the County of Merced Community Regional Homeless Plan by striving to fund any of the following activities each year through public services and housing provider partnerships, as funding availability, non-profit organization capacity, and community need allows:
• Rental and utility assistance/homeless prevention
• Security deposit assistance/support for rapid re-housing programs • Owner occupied rehabilitation
• Housing navigation services
• Homeless program operating cost support
• Health services
• Mental health services
• Legal aid services to homeless and low-income persons • Services for victims of domestic violence
• Permanent supportive housing
• Employment training
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• Programs to address barriers to employment, such as self-sufficiency skills and personal finance education
• Childcare services, including parenting skills classes • Food bank operating costs
• Construction of affordable housing units
• Provide set-aside units within housing projects for homeless and special needs • Fair housing services
As the Housing Division does not have the staff capacity to provide these services, the City relies heavily on existing and new non-profit organizations as subrecipients to carry out these activities.

Actions taken to reduce lead-based paint hazards. 91.220(k); 91.320(j) Since a majority of housing units in the City of Merced were built before 1978, the City requires lead- paint testing for all acquisition and rehabilitation projects. If lead-based paint is detected within the project area, the Housing Division requires that the problem is abated prior to the final reimbursement, closeout of the project, and occupancy of the unit. As required by Federal and State funding sources, housing rehabilitation programs must comply with the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X) and subsequent changes made since its enactment.

As part of its procedures, the City requirements include:
• Notification of potential lead-based paint hazards
• Identification
• Treatment, if necessary
The City works with its Acquisition with Rehabilitation and Homeowner Occupied Rehab subrecipient partners to abate properties that are identified as potentially containing lead-based paint by requiring testing for every project. The practice of automatic testing for all relevant projects was fully implemented in the 2019 Annual Plan for all contracts and programs, no matter the age of the structure involved.

The 2023 Annual Plan dedicated funding to Habitat for Humanity of Merced/Stanislaus County (HHMSC) for the second year of a three-year homeowner occupied rehabilitation program. The program assists homeowners with abating properties of any lead paint hazards, as well as helping with needed repairs.

Actions taken to reduce the number of poverty-level families. 91.220(k); 91.320(j) The City's anti-poverty strategy is based on funding and supporting a range of housing, employment, and family service opportunities aimed at enabling those in poverty to move into or increase their skills in the workforce. Also, the City, in cooperative efforts, continues important planning strategies with the Continuum of Care and its partnering cities and non-profit agencies to identify resources available to CAPER 42
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reduce the number of persons living below the poverty level and address the needs of the community.

We continue to encourage job and life skills training programs and the provision of connections to employment agencies.

For the last few program years, and again in this upcoming PY2024, the City partners with LifeLine CDC to deliver employment training and healthy, meaningful afterschool activities to poverty-level residents living in the Loughborough Area of Merced. This program has brought these neighborhoods together for clean up events is able to assist adults members of households with workforce connections, employment training, sometimes healthy nutrition supplementation if needed, and personal finance management skills, as well as afterschool childcare for their little ones.

Actions taken to develop institutional structure. 91.220(k); 91.320(j) The City continues to support and encourage an institution-wide - even inter-agency - cooperation and partnership with developers, non-profit organizations, and other organizations through the provision of financial and/or technical assistance in working towards the shared goal of providing affordable housing opportunities to extremely low-, very-low, low- and moderate-income households. As we continue these relationships, we are constantly evaluating and striving to improve on their effectiveness in addressing the community's housing issues. The City continues to find ways to provide support by way of multi-agency partnerships, technical assistance, funding support, expedited permit processing, fee deferrals, land write-downs, and incentives and concessions that meet or exceed State density bonus law as appropriate.

Though it can be a challenge with a small staff, the Housing Division resolves to be diligent and thorough in our approach to working with developers, monitoring the progress of projects at all stages, and remaining compliant with HUD rules, laws, and authorities. The City is currently working to update its environmental, monitoring, and other policies and procedures to remain compliant with HUD requirements.

The Housing Division also continues to work with the all City departments, particularly Code Enforcement, Police/Fire, and Building, to identify substandard housing and encourage the owners to contact the Housing Division. If the homeowner is living in a non-compliant residence, Housing staff will contact Habitat for Humanity to see if the homeowner is eligible for the Homeowner Rehabilitation Program. If the property owner is not living on-site and would like to sell the substandard unit, we assist the property owner in connecting with local non-profit organizations who may be interested in purchasing the unit, thereby transforming the unit from market rate to affordable housing. Whether by homeowner rehab or acquisition and rehab, these measures to identify and improve these units in this way also improves and stabilizes the neighborhoods in which they are located and improves the lives of the residents in them.

Lastly, the City continues to encourage the creation of housing units for households earning 30% or less of Median Family Income, with emphasis on housing for families, single-occupant units, transitional CAPER 43
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facilities, and housing units serving temporary needs.

Actions taken to enhance coordination between public and private housing and social service agencies. 91.220(k); 91.320(j)
The City continues to hold community meetings to enhance coordination between housing providers, government agencies, and other key stakeholders in the City and County.

We have also continued to participate in and fund the Continuum of Care (CoC) in planning for the fight against homelessness, joining other governmental agencies, service providers, and community member in sharing information on existing programs, identifying areas for improvement in the coordination of services, and exchanging knowledge of best practices to better understand and address the community¿s needs as a whole. The Continuum of Care holds quarterly board meetings to provide a platform for agencies to coordinate services and exchange information. Board Members of the Continuum of Care include public housing authorities, service providers, community stakeholders, and people who have experienced homelessness themselves. These meetings are held to address unmet needs and ensure that resources are leveraged and not duplicated.

The Merced County Human Services Agency became the Collaborative Applicant in 2017 and still oversees the CoC. A staff member is designated to serve on the Board as a liaison between the department and homeless clients/service providers experiencing barriers in receiving assistance. The County has had a significant presence in the Project Homeless Connect events held each year pre- COVID-19. At these events, the needs of at-risk individuals and people experiencing homelessness were assessed on-the-spot to get them connected to services immediately. These linkages increased the community¿s efforts to avoid discharge into homelessness, as well as to serve the existing homeless population. These beneficial events resumed in Spring of 2023.

In addition to the actions listed above, the City will continue to try to enhance coordination and work with the Housing Authority of Merced County, housing and service providers, and faith-based organizations to identify services, housing, and other needs. Other agencies that we will continue to collaborate with include the Central Valley Coalition for Affordable Housing and Habitat for Humanity Merced/Stanislaus Counties. These and other such relationships are extremely important in providing safe, affordable housing to residents in need.

Identify actions taken to overcome the effects of any impediments identified in the jurisdictions analysis of impediments to fair housing choice. 91.520(a) Insufficient supply of affordable rental housing:

The City of Merced has identified the provision of affordable housing as a high priority in the City’s Housing Element, as well as the Analysis of Impediments to Fair Housing Choice, and it is a need expressed continually by the residents of our community. The City continually works to be able to CAPER 44
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provide these crucial housing units.

While the City is not a direct provider of affordable housing, it does assist developers and non-profit organizations with affordable housing funding. The City is currently working with several affordable housing developers on projects that will further alleviate the impediments to housing choice that the affordable housing crisis continues to present.

Whenever possible, the City funds acquisition and rehabilitation of existing affordable rental units in collaboration with non-profit organizations and leverages other City monies to assist with financing new construction.

As a result of feedback from the public regarding the City’s ordinances and policies that may be unintentially causing barriers to housing construction and affordability, staff and City Council have proactively looked for ways to increase the number of affordable units, whether by creating workable, custom-fit policies unique to Merced, adjusting fee schedules to encourage the construction of affordable units either directly by developers or via a Council-appropriated Housing Opportunity Fund, by seeking funding opportunities and creative subsidy layering strategies, or a combination of these.

Unfair Lending Practices:

Homebuyer education classes remains a potential project for future Annual Plan funding. However, residents who will be taking advantage of First Time Homebuyer Program through 2021 CalHome funding will receive homebuyer education training.

These classes give residents the knowledge they need to help them recognize any unfair lending practices in their future home purchase transactions.

Fair Housing Education Efforts
During PY2023, Project Sentinel exceeded their annual goal for the number of people served through Intake and Referral services by assisting a total of 66 people. Over the courses of the year, they also surpassed their outreach goals in assisting another 147 city residents through direct outreach and opened four fair housing case investigations (goal of 8 cases). Additionally, Project Sentinel distributed a total of 2,914 pieces of educational materials, which includes both mailers and brochures, such as those distributed to and available from the Housing Division. Project Sentinel staff also attended Continuum of Care meetings this year and updated their website to streamline how tenants can access fair housing resources (website address: https://www.housing.org/resources). Project Sentinel did experience the loss of two critical staff late in the program year, but have since hired replacements to be able to assist City of Merced residents during the 2024 program year and beyond. In fielding calls and concerns from CAPER 45
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residents, Project Sentinel reports a large trend in clients needing fair housing assistance based on their disability-related needs, as well as race and source-of-income complaints.

CAPER 46
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CR-40 - Monitoring 91.220 and 91.230
Describe the standards and procedures used to monitor activities carried out in furtherance of the plan and used to ensure long-term compliance with requirements of the programs involved, including minority business outreach and the comprehensive planning requirements
Currently, the Housing Division is staffed with three full-time positions, including one supervisor. The Housing Division is one of four divisions within the Development Services Department, which is overseen by the Development Services Director. The Housing Division team is tasked with managing the day-to-day operations and compliance oversight of CDBG, HOME, and State programs, projects, and grants, which includes the planning and management of the Consolidated Plan, non-profit program funding process, Annual Plan, and annual performance reports. In addition, Housing team is responsible for oversight and monitoring all of the yearly public service and long term rental housing projects for both the CDBG and HOME-assisted projects through their various periods of affordability, as well as servicing the Division’s housing loan portfolio.

Over the last ten years, the Housing team has seen its numbers reduced from six employees to the current three. However, in many of those years, especially since mid-2019, Housing Division has been a staff of just two, due to periods when positions were left vacant for long periods due to employee departures, extended hiring processes, and approved leaves of absence. Project management tasks that have been heavily impacted by these unfortunate staffing issues have been staff training on various compliance elements and annual subrecipient and long-term rental housing monitoring, this during periods when more rental housing projects were being completed and added to the monitoring portfolio. The 2020 COVID-19 Corornavirus pandemic threw further complications into this dynamic, and monitoring of all types has suffered greatly as staffing levels have continued to turn over and workload has increased.

In-depth training in various areas of intricate HUD regulations, writing clear and structured policy and procedures for those areas, and rental housing monitoring remain areas that are deficient and have been affected the most from the staffing constraints, especially with training new employees into the team, management of new subrecipient programs and their respective nonprofit organizations, and new CDBG and HOME-assisted rental housing projects are planned, developed, and occupied.

The Division performs desk reviews as subrecient reimbursement requests are submitted and staff continues to communicate with each subrecipient by email, online meetings, and telephone calls as much as possible to make sure programs remain compliant. There were no problems with public service programs that needed mitigation as a result of these monitoring efforts.

Multi-Family Housing Program Monitoring
City Housing staff should conduct site visits and audits annually to multi-family housing projects during CAPER 47
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the period of affordability to review record keeping, upkeep of facility, and ensure that tenant income eligibility requirements are being maintained. If discrepancies are found, the manager or authorized agent will be informed during the on-site visit, provided a formal letter, and provided 30-days to correct any findings and/or work with staff for a reasonable timeline in achieving compliance for those items.

Once compliance has been achieved, the manager or agent receives a clearance letter from the City.

The City Council is informed of any unresolved problems during the budget process. Before each monitoring, the City allows each manager or agent reasonable time to prepare for the monitoring.

Single-Family Housing Program Monitoring
Single family, duplex, triplex, or quadplex homes rehabilitated or purchased with CDBG and/or HOME funds for use as rental properties for moderate to low-income families should be monitored regularly, if not annually, by City staff. The owner is provided a letter requesting information and income verification of the current renters. Given a small staff, City of Merced Housing visitations to all sites in one program year is not feasible; instead, staff should ensure that a minimum of one to three sites are visited on a rotating yearly schedule. If discrepancies are found, the subrecipient and/or on-site manager will be informed during the in person visit, provided a formal letter, and provided 30-days to correct the problem; and/or work with staff for a reasonable timeline.

Public Service/Other Activity Monitoring
Although no written procedures are in place as yet, the City has established a history of monitoring procedures for monitoring of public service program subrecipients to ensure compliance with all CDBG and HOME activity requirements, income eligibility, and national objectives. Those procedures include written contracts and invoicing before funds are distributed; mandatory pre-application workshops with applicants and new subrecipients to ensure an understanding of reporting requirements; clear timelines for measured success; reporting forms that include hours, task, client demographic information, and income range; and, clear provision of information on HUD's cost and other principles. Reporting of demographics and other data points are required with each invoice, and year-end evaluations are required. All subrecipients should normally receive one on-site visit during the program year.

Minority Outreach
Annual public outreach and project funding processes involve translated notices and invitations to both Hmong and Latino commerce and service provider groups. The Merced Lao Family Community Inc. is the main support organization that provides social and business services to Hmong residents, and the Hispanic Chamber of Commerce is included in all processes, including Annual Action and Con Plan consultation. Language interpretation is provided and available at all meetings held throughout the year, and subrecipients are required to provide or arrange for language interpreters to clients, when needed.

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Citizen Participation Plan 91.105(d); 91.115(d)
Describe the efforts to provide citizens with reasonable notice and an opportunity to comment on performance reports.

Staff made a concerted effort to reach out to the community for comments and input about the 2023 CAPER. The public was notified of the CAPER’s availability through notifications in two newspapers, website postings, at a public meeting, and the City Council approval meeting. The CAPER report process was also mentioned during City Council and other meetings throughout the year when speaking with local housing and other community advocates.

The availability of the FY 2023 CAPER for public review and a request for comments was publicly noticed in the following ways:
• August 15, 2024 - Notices were posted on the Housing Division Public Notices webpage. • August 15, 2024 - A Public Notice was published in the Merced County Times weekly print and online newspaper. The notice informed the public how special accommodations for the CAPER public input process could be requested, and how to view and comment on the public review document.
• August 18, 2024 - A Public Notice was published in the Merced Sun-Star daily print and online newspaper. The notice informed the public how special accommodations for the CAPER public input process could be requested, and how to view and comment on the public review document.
• August 26, 2024 – A Public Input Meeting to solicit public input was held in the Sam Pipes Meeting Room, 1st Floor City Hall, from 5:30-6:30 p.m.
• August 27 to September 11, 2024 - A 16-day Public Review and Comment Period was held. The draft CAPER was posted on City website prior to the start of the review period and available for in-person viewing in the Housing Division office.
• September 16, 2024 – Public Meeting at City Hall to request Council action to approve the CAPER.

During the program year, two substantial amendments were made to the 2023 Annual Plan.

There were no minor/technical amendments made during the Program Year.

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CR-45 - CDBG 91.520(c)
Specify the nature of, and reasons for, any changes in the jurisdiction’s program objectives and indications of how the jurisdiction would change its programs as a result of its experiences.

Overall, the priorities that were identified in the initial 2023 Annual Action Plan were implemented and remained unchanged through the program year. However, in October 2023, CDBG funds were removed from most of the planned public infrastructure/facility and park improvement projects and were added to the existing Devonwood Apartments affordable housing project to finance the acquisition of the vacant land needed for the project.

Each year, community outreach efforts are meaningful and informed when developing the Annual Action Plan. City staff continually seeks new ways to expand outreach and community engagement, and the input gleaned from citizens gets prioritized during the development of the plan. Our goal is to strive to meet the community’s most pressing needs when determining project funding.

For many years, the dire need for more rental housing units has been the City’s number one most needed yet most underfunded project type, as expressed by residents in assessment surveys and public forums. As such, while these types of projects are complicated and carry their own compliance requirements and increased workload, the City has made huge efforts since 2018 to meet this demand.

Accordingly, the City’s own internal priority objectives must keep up with this demand and output.

The City takes a proactive approach and continually evaluates programs, projects, and activities to ensure they are meeting targeted goals, as well as keeping in line with current levels of funding. As a result of our experience, difficult and strategic recommendations are made to City Council. CDBG timeliness expenditure ratios are monitored each month, as are HOME commitment and expenditure deadlines.

The City’s Citizen Participation Plan (CPP) allows minor and technical amendments to be reviewed and authorized by the City Manager. Substantial amendments are defined by the CPP as a change that affects more than 75% of the allocation of funding in any project and/or the total distribution.

Substantial amendments require public notices be published in local newspapers and a 30-day public review and comment period. The City encourages residents to participate in all phases and plans during theprogram year, including at all City Council meetings. No amendments to the CPP were made during the 2023 program year.

The Goals and Objectives established in the 2020-2024 Consolidated Plan and ensuing Annual Action Plans were not changed during the 2023 program year.

Does this Jurisdiction have any open Brownfields Economic Development Initiative (BEDI) grants?
CAPER 50
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No
[BEDI grantees] Describe accomplishments and program outcomes during the last year.

Not applicable.

CAPER 51
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CR-50 - HOME 24 CFR 91.520(d)
Include the results of on-site inspections of affordable rental housing assisted under the program to determine compliance with housing codes and other applicable regulations Please list those projects that should have been inspected on-site this program year based upon the schedule in 24 CFR §92.504(d). Indicate which of these were inspected and a summary of issues that were detected during the inspection. For those that were not inspected, please indicate the reason and how you will remedy the situation.

The Coronavirus pandemic presented an enormous hurdle for our staff and subrecipients for program monitoring, especially the ability to safely perform on-site visits between City staff, site managers, and residents of units. As restrictions of the Pandemic lifted, the Housing Division and subrecipients were still recovering from the effects of delays during these times. Both the 2022 and 2023 program years were spent largely on the effort to catch up to expenditure hurdles caused by overlapping prior-year Pandemic-related delays and the large amount of CDBG and HOME program income that has come in during this Consolidated Plan period, as well as remedying issues discovered in a January 2020 Environmental monitoring by HUD, while pushing forward current programs. Additionally, for a large majority of the 2023 program year, the Housing Division again found itself down a staff member. Thus, on-site monitoring of affordable housing units was unfortunately affected by these circumstances (please also see Section CR-40 – Monitoring for further discussion).

Single-Family Housing Program Monitoring
Homes rehabilitated or purchased with HOME funds for use as rental properties for moderate- to low- income families are normally monitored annually by Housing staff. The owner is provided a letter requesting information and income verification of the renter. Given a small staff, City of Merced Housing Division visitations to all sites is not feasible; instead, staff ensures that a minimum of one or two sites is visited. If discrepancies are found, the subrecipient and/or on-site manager will be informed during the on-site tour, provided a formal letter, and provided 30-days to correct the problem; and/or work with staff for a reasonable timeline.

Multi-Family Housing Program Monitoring
The City is required to monitor multi-family housing subrecipients to review record keeping, the upkeep of facilities, and to ensure eligibility requirements are being maintained. A City inspector is part of this tour, and if discrepancies are found, the subrecipient is informed during the on-site tour, provided a formal letter, and provided 30-days to correct the finding and/or work with staff for a reasonable timeline.

Annual audits are required by these subrecipients for their programs. If discrepancies in this area are found, the subrecipient is informed immediately, and a formal letter is mailed. The subrecipient is given CAPER 52
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30 days to correct the problem or provide a timeline for correction. The City will work with the organization to ensure the requirements are understood and that compliance is attained. Once compliance has been achieved, the sub-recipient receives a clearance letter from the City. The City Council is informed of any unresolved problems during the budget process. These same procedures will be followed with non-housing subrecipients.

The City has enlisted the services of RSG, Inc. for multi-family rental project monitoring, including monitoring for income-eligibility and tenant file inspections.

Inspections and Property Standards for Projects Using HOME funds The inspection schedule in 24 CFR 92.504(d) notes that inspections are required at two different stages of a project; at project completion, and during the period of affordability, to determine that the project meets the property standards contained in 24 CFR 92.251. These required Property Standards include specific requirements for new construction projects, rehabilitation projects, acquisition of standard/existing housing, occupied housing by tenants receiving HOME tenant-based rental assistance, manufactured housing, and ongoing property condition standards for rental housing.

New Construction Projects: Section 92.251
Property Standards for new construction projects require that, first, the project meet State and Local codes, ordinances, and zoning requirements. Second, all new construction projects must also meet: 1) accessibility requirements contained in 24 CFR Section 8 (Nondiscrimination Based on Handicap in Federally Assisted Programs and Activities), 2) any disaster mitigations, 3) written cost estimates and construction contracts/documents, 4) progress and final construction inspections, and 5) requirements for the provision of broadband infrastructure.

The Devonwood Apartments affordable housing project broke ground in May 2024, and site grading work continued through the end of June 2024 to finish out the program year. Grading and encroachment permits are issued and inspected by City Building and Engineering Department staff. This project is not expected to finish construction until approximately October 2025 and likely will not be fully occupied until early Spring 2026.
(Inspections and Property Standards continued)
Acquisition of Standard/Existing Housing and Rehabilitation Projects: Section 92.251 Property Standards for rehabilitation projects have specific standards that require health and safety or life threatening deficiencies be addressed immediately if the unit is occupied, and that major systems, such as roofing and plumbing, be addressed in rehab activities. Lead based paint, accessibility, state and local codes, and broadband infrastructure requirement for projects involving more than four units.

The City of Merced has used HOME funds in past owner-occupied rehab projects. The last such project CAPER 53
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was in 2016 in partnership with Habitat for Humanity Merced/Stanislaus Counties with their Brush for Kindness program.

Existing standard housing units that are acquired with HOME funds for rental housing and units that were built within a year before the commitment of funds must meet the new construction and rehabilitation standards.

The City of Merced typically utilizes CDBG funding for its Acquisition with Rehabilitation projects.

However, the City has used some HOME funds to supplement the use of CDBG funding in past years.

The City generally follows the Section 92.251 acquisition and rehab property standards in CDBG assisted projects, with lead based paint, health and safety, and accessibility being the first and most important focus of rehab activities.

There were no HOME-funded acquisition with rehab or homeowner-occupied rehab projects planned or funded during the 2023 program year. Housing staff performed on-site inspections for the four prior year CDBG-assisted acquisition with rehab rental units that were completed during program year 2023.

Acquisition with Rehab projects that have included the use of HOME funds in recent years include:

PY2020: Sierra Saving Grace Acq/rehab of 1890 Calimryna Avenue: $93,249 of HOME funds were used in the purchase and rehab of this existing duplex. This project was severely affected by COVID-19 related Annual Plan delays and supply chain issues. Rehabilitation activities conversion of the existing garage to a studio unit. The purchase of the property occurred on 11/30/2021. A Certificate of Occupancy was issued for the original duplex on 4/14/23, and the garage conversion received its occupancy clearance on 8/29/2023, during the 2023 program year. All three units are used for rental housing. This project required extensive monitoring of inspections by Housing staff during the rehab and permitting process to oversee ADA accessibility requirements were met.

Tenant-Based Rental Assistance and Manufactured Housing:

The City of Merced has not used HOME funds for tenant based rental assistance or manufactured housing.

Ongoing Property Condition Standards for Rental Housing:

The City of Merced is in the process of extensively updating its Monitoring Policies and Procedures to include inspection checklists, property standards requirements, and a rotating monitoring schedule for the rental housing projects that have recently completed and are due for inspections. As previously mentioned elsewhere in this CAPER, this as been an ongoing priority on the City's tasklist; however, staffing levels have hindered its progress. This continues to be a priority focus for Housing Division staff.

Provide an assessment of the jurisdiction's affirmative marketing actions for HOME units. 24 CAPER 54
OMB Control No: 2506-0117 (exp. 09/30/2021)
CFR 91.520(e) and 24 CFR 92.351(a)
The City of Merced continues to follow the Affirmative Marketing Policy as outlined in the Consolidated Plan and monitors compliance with the Policy by the City and participating property owners on an annual basis.

The City of Merced Housing Division is responsible for implementing the Affirmative Marketing Policy and evaluating its effectiveness concurrently with the HOME Program:
• The Housing Division shall inform the public about the Affirmative Marketing Policy through handouts and application forms, periodic advertisements in general circulation newspapers, and regularly scheduled public meetings.
• The City shall, at times, display informational posters in the Merced City Hall Lobby, which is open to the public. All graphic presentations concerning the HOME Program shall display the HUD Equal Housing Opportunity logo or slogan.
• The owners of buildings selected for rehabilitation shall likewise be informed about the City’s Affirmative Marketing Policy at the time that an application is submitted to the Housing Division. • The City shall also provide tenants and rental property owners with copies of the “Landlord- Tenant Fact Sheet” produced by the State Department of Consumer Affairs. • The City shall continue its practice of providing general information and telephone reference numbers to persons contacting the Housing Division with questions regarding affirmative marketing, federal fair housing, tenant’s rights, assisted housing, and correction of substandard conditions in tenant-occupied dwellings.

This year, the City continued the services of the Fair Housing Services provider (Project Sentinel) for all Merced residents. Some of the services provided by Project Sentinel include seminars, educational pamphlets, and counselors to assist renters with any fair housing questions or problems.

Refer to IDIS reports to describe the amount and use of program income for projects, including the number of projects and owner and tenant characteristics In January 2021, the City received a large loan payoff of HOME, Section 108 Loan Guarantee, and local LMI Asset funds from The Grove Apartments. The City used a $2,400,000 portion of the $3,877,751 of CDBG funds received in that transaction towards the Childs and B Street Affordable Housing Project via a Substantial Amendment process during the 2020-21 program year. The remaining CDBG funds were allocated through the 2021 and 2022 Annual Plans to several public improvement projects that did were unfortunately not able to be implemented during the 2022 program year. As previously stated elsewhere in this CAPER, the City performed two substantial amendments to the 2023 Annual Action Plan to move the last of the Grove CDBG program income funds from infrastructure projects to the Devonwood Apartments projects, to acquire the vacant land needed for the project. The project will also use up the last of the remaining HOME program income towards eligible unit construction related costs.

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Describe other actions taken to foster and maintain affordable housing. 24 CFR 91.220(k) (STATES ONLY: Including the coordination of LIHTC with the development of affordable housing). 24 CFR 91.320(j)
The HOME program objectives continue with promoting, maintaining, and providing affordable housing by working with affordable housing developers and nonprofit organizations.

In April 2021, the City published an open RFQ (Request for Qualifications) to continuously recruit affordable housing developers as potential partners for both current and future affordable housing projects. The RFQ attracted several affordable housing developers, whom in 2023 we continued working with on several viable future and progressing projects in the City of Merced. This RFQ list will continue to be utilized for the foreseeable future.

In April through May 2021, an RFP (Request for Proposal) was published to enlist proposals from affordable housing providers for disposition of properties owned by the City as Housing Successor Agency to the former Redevelopment Agency. During 2023, the City continued working with three of these developers – Fuller Center for Housing of Merced County, Linc Housing, and Certified Containers 915 – on affordable housing developments using Housing Successor and State-awarded grant funding, including a second Homekey award for CC915 on a new project.

During the 2023 program year, the City and Habitat for Humanity Merced/Stanislaus Counties restarted the CDBG-funded homeowner occupied program, and Housing staff are currently preparing NEPA documents for two homeowner rehab projects. Once cleared, these projects can move forward with rehabilitation activities.

Sierra Saving Grace completed rehab work on four properties purchased with prior year CDBG funds.

These are now rented to LMI and formerly homeless households.

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CR-58 – Section 3
Identify the number of individuals assisted and the types of assistance provided

Total Labor Hours CDBG HOME ESG HOPWA HTF
Total Number of Activities 0 0 0 0 0
Total Labor Hours 0 0
Total Section 3 Worker Hours 0 0
Total Targeted Section 3 Worker Hours 0 0
Table 14 – Total Labor Hours

Qualitative Efforts - Number of Activities by Program CDBG HOME ESG HOPWA HTF Outreach efforts to generate job applicants who are Public Housing Targeted Workers 0 0
Outreach efforts to generate job applicants who are Other Funding Targeted Workers. 0 0
Direct, on-the job training (including apprenticeships).

Indirect training such as arranging for, contracting for, or paying tuition for, off-site training.

Technical assistance to help Section 3 workers compete for jobs (e.g., resume assistance, coaching).

Outreach efforts to identify and secure bids from Section 3 business concerns.

Technical assistance to help Section 3 business concerns understand and bid on contracts.

Division of contracts into smaller jobs to facilitate participation by Section 3 business concerns.

Provided or connected residents with assistance in seeking employment including: drafting resumes,preparing for interviews, finding job opportunities, connecting residents to job placement services. 1 0
Held one or more job fairs.

Provided or connected residents with supportive services that can provide direct services or referrals. 1 0
Provided or connected residents with supportive services that provide one or more of the following: work readiness health screenings, interview clothing, uniforms, test fees, transportation.

Assisted residents with finding child care. 1 0
Assisted residents to apply for, or attend community college or a four year educational institution.

Assisted residents to apply for, or attend vocational/technical training.

Assisted residents to obtain financial literacy training and/or coaching. 1 0 Bonding assistance, guaranties, or other efforts to support viable bids from Section 3 business concerns.

Provided or connected residents with training on computer use or online technologies. 1 0
Promoting the use of a business registry designed to create opportunities for disadvantaged and small businesses.

Outreach, engagement, or referrals with the state one-stop system, as designed in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.

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Other.

Table 15 – Qualitative Efforts - Number of Activities by Program

Narrative
Section 3 is a provision of the Housing and Urban Development Act of 1968, since amended and expanded, for the purpose of ensuring that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing federal, state, and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of governmental assistance for housing and to business concerns which provide economic opportunities to low- and very low-income persons. The HUD Act of 1968 was enacted as a result of civil unrest in the 1960’s, to which nationwide high unemployment was a contributing cause.

Training or employment opportunities resulting from public housing development or operating assistance including administration, management, clerical support, and construction, as well as those that arise in connection to a HUD-funded housing rehabilitation, housing construction, or other public construction project that exceeds $200,000, are subject to compliance with Section 3. Additionally, contracting opportunities arising from public housing and other Section 3 projects are required to be given to business concerns that provide economic opportunities to low- and very-low persons.

The Final Rule to the Section 3 regulations took effect on November 30, 2020, and creates more effective incentives for employers to retain and invest in their targeted workers, streamline reporting by aligning them with typical business practices, provide for program-specific oversight, and clarify the obligations of entities covered by Section 3. This Final Rule requires certain benchmarks to be met, which are updated by the Secretary of HUD every three years. An update was published on October October 5, 2023, that issued no changes to the prior benchmarks.

The 2023 program year is the third year of CAPER reporting required by the Section 3 Final Rule. As an entitlement jurisdiction that receives annual formula grants of CDBG and HOME and special allocations such as CDBG-CV and HOME-ARP funding, the City of Merced is required to comply with Section 3 regulations. The current benchmarks are:
• 25 percent of all labor hours must be performed by a Section 3 worker; and, • 5 percent of labor hours must be performed by Targeted Section 3 workers There were no housing rehabilitation, housing construction, and other public construction projects that exceeded a per-project threshold of $200,000 which were completed during the 2023 program year.

The City completed an ADA project during the program year that fell below the threshold amount, and Sierra Saving Grace completed four rehabilitation projects that each fell below the per-project threshold for the rehab portion of the project.

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If the City had not been able to meet the above benchmarks in this or in any year for any qualifying project, Qualitative Effort reporting using the above table would have been necessary. Section 3 requirements do not apply to public service projects, as they do not include housing rehab, construction, or other public construction above $200,000. Therefore, public service projects typically would not be included on the table.

However, through CDBG funding, the City enlisted subrecipient public service programs that fulfilled some of the above services to low-income residents and have included these activities in the table.

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Attachments

1. City Council Resolution __________

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2. PR26 Financial and Activity Summaries (CDBG and CDBG-CV)

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3. Annual Performance and HOME Match Reports (40107, 40107-A)

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4. CDBG, CDBG-CV, and HOME Fiscal, Activity, and Accomplishment Reports

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5. Public Notices, Public Comment Summary, and Other Outreach

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