DATE:
April 26, 2022
CATEGORY:
Public Hearing
DEPT.:
Community Development
TITLE: Funding Recommendations for Fiscal
Year 2022-23 Annual Action Plan
RECOMMENDATION
1. Approve the Fiscal Year 2022 -23 Annual Action Plan for Community Development Block Grant and Home Investment Partnership Program funds (Attachment 1 to the Council report), and authorize the City Manager or designee to execute and submit any required forms and certifications to the U.S. Department of Housing and Urban Development.
2. Allocate approximately $1,509,789 ($738,112 of Community Development Block Grant funds, $771,677 of available Home Investment Partnership Program funds) for capital projects, including the potential acquisition and rehabilitation of the Crestview Hotel property by the County of Santa Clara for permanent or transitional housing, a project that would meet various housing needs and/or other affordable housing projects.
3. If the actual grant amount received from the U.S. Department of Housing and Urban Development for Community Development Block Grant and Home Investment Partnership Program Federal Program Year 2022 -23 is different than the estimated amount in Recommendation No. 2, then authorize the Community Development Director or designee to proportionally adjust the amount allocated to the potential acquisition and rehabilitation of the Crestview Hotel and/or other affordable housing projects.
4. Find the above actions exempt under the California Environmental Quality Act under Health and Safety Code Section 50675.1.4 as to the Crestview Hotel project funding and CEQA Guidelines Section 15061(b)(3) as to all other actions.
BACKGROUND
The purpose of this public hearing is for the City Council to receive public input per the City’s Citizen Participation Plan regarding funding recommendations and annual expenditures of the Federal Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) and Home Investment Partnership Program (HOME) funds.
Funding Recommendations for Fiscal Year 2022-23 Annual Action Plan April 26, 2022
Each fiscal year, the City, as a Federal “entitlement jurisdiction,” directly receives CDBG and HOME funds from HUD to invest in qualifying public service activities and capital projects in Mountain View. The City is required to develop Annual Action Plans (AAP) that identify the specific public services and capital projects that will be funded with CDBG and HOME funds, in alignment with the goals and priorities identified in the City’s Federally required five -year Consolidated Plan (currently for the 2020 through 2025 period).
The City funds public service activities on a two-year cycle through a Notice of Funding Availability (NOFA) process, and funding allocations for both years are made in t he first year of the cycle .
The current two-year cycle began in Fiscal Year 2021-22, and this Fiscal Year 2022-23 AAP is the second year of the current two -year cycle. Additionally, the City typically funds capital projects on an annual basis, either through a NOFA process or directly allocating funds to eligible projects.
More details regarding the public services and capital project funding for this Fiscal Year 2022-23 AAP are provided in the Analysis section below.
ANALYSIS
The total funding available for the Fiscal Year 2022 -23 AAP is $1,746,789, which will be used to fund the second year of the public services cycle, one capital project, and administration costs.
Below is a breakdown and summary of the funding and uses:
Fiscal Year 2022-23 CDBG Allocation
For Fiscal Year 2022 -23, it is estimated that the City’s allocation for CDBG funding will be approximately $600,000. A maximum of 15 % of the allocation is allowed for public service activities (approximately $90,000); 20% maximum for administration ($120,000); and the remainder for capital projects ($390,000).
Fiscal Year 2022-23 HOME Allocation
For Fiscal Year 2022 -23, it is estimated that the City’s allocation for HOME funding will be approximately $270,000. A maximum of 10 % is allowed for administration ($27,000) and the remainder for capital projects ($243,000).
Unallocated Funds
In addition to the estimated funding, the City periodically receives Program Income from past projects that have received CDBG and/or HOME funding. These are typically affordable housing projects that are repaying the City’s affordable housing loan that included the Federal funding.
Historically, the frequency and amount of Program Income fluctuates year to year. In the past two yea rs, the City has received relatively large amounts of Program Income. For F iscal Year 2021-22 to-date, the City has received $236,236 in CDBG Program Income and $521,486 in Funding Recommendations for Fiscal Year 2022-23 Annual Action Plan April 26, 2022
HOME Program Income, of which $100,000 from each was allocated as part of last year’s AAP.
Additionally, the City has funds from prior years that had been allocated towards administration but went unspent. The unallocated Program Income and unspent prior year funds are totaled in the table below as unallocated funds.
Expected Program Income
Finally, the City always estimates and allocates $100,000 in CDBG Program Income and $100,000 in HOME Program Income to be received in the coming fiscal year as part of the AAP.
Summary Table
Table 1 , below, summarizes the total amount of funding availa ble ($1,746,789) for the Fiscal Year 2022-23 Annual Action Plan, which includes the CDBG and HOME allocation, unallocated funds, and expected Program Income.
Table 1: Funding Available and Proposed Uses for the Fiscal Year 2022-23 Annual Action Plan
Funding Source Category Proposed Use Funding Amount
CDBG Fiscal Year 2022-23
Allocation
Administration Administration $ 120,000
Public Services Year Two of Grant Cycle 90,000
Capital Projects Affordable Housing 390,000
HOME Fiscal Year 2022-23
Allocation
Administration Administration 27,000
Capital Projects Affordable Housing 243,000
CDBG Unallocated Funds Capital Projects Affordable Housing 248,112 HOME Unallocated Funds Capital Projects Affordable Housing 428,677 CDBG Program Income Capital Projects Affordable Housing 100,000 HOME Program Income Capital Projects Affordable Housing 100,000 TOTAL $1,746,789
Funding Recommendations for Fiscal Year 2022-23 Annual Action Plan April 26, 2022
Table 2, below, summarizes how the various funding sources will be distributed to proposed uses, as further discussed in the Analysis section.
Table 2: Proposed Uses for the Fiscal Year 2022-23 Annual Action Plan
Proposed Use CDBG HOME Total
Administration $120,000 $ 27,000 $ 147,000
Public Services 90,000 - 90,000
Capital Projects 738,112 771,677 1,509,789
TOTAL $948,112 $798,677 $1,746,789
Public Services
The City funds public services on a two -year cycle using CDBG funds. The process includes City issuance of a Notice of Funding Availability (NOFA) at the beginning of the two -year cycle, receiving and reviewing applications submitted by nonprofit organizations, and bringing forward the funding recommendations for Human Relations Commission (HRC) and Council consideration. The amount of two -year funding available is based on the estimated amount of CDBG funds the City expects to receive each year. Should the actual amount of CDBG funding received differ from the estimates, the funding for each organization is proportionately adjusted each year as needed.
As such, there is no NOFA process for public services in the second year of the two-year cycle.
The Fiscal Year 2021 -22 AAP was the first year of the current two -year cycle, which includes HRC-recommended and City -approved public services. This Fiscal Year 2022 -23 AAP process is the second year of the two -year cycle , and the ac tivities, agencies, and funding levels were already determined last year. This includes 10 public service activities meeting various Consolidated Plan goals, as well as the two -year funding levels, including an estimated $90,000 in CDBG funding for Year Two, i.e., Fiscal Year 2022 -23 (see Attachment 2). These projects and funding levels will be included in the Fiscal Year 2022-23 AAP. Of note, the majority of the funds in the two-year public services grant cycle were designated in the first year because of significant available Program Income and the significant community need during the COVID -19 pandemic.
Because the majority of the funds were allocated in the first year, agencies were given flexibility to spend the funds over more than a year. The remaining allocations represent ing Year Two funding comprise approximately 20% of the total two-year CDBG grant amount to each organization.
Capital Projects
The City has historically issued annual NOFA s for capital projects to be funded with CDBG and HOME moneys. Capital funding in the past has been used for affordable housing developments, Funding Recommendations for Fiscal Year 2022-23 Annual Action Plan April 26, 2022
renovations of nonprofit buildings, and public works projects like new parks or sidewalk improvements. Over the past few years, it has been difficult to fund capital projects through the NOFA process, primarily because there has been a lack of nonprofits interested in receiving Federal funds, the City’s funding allocation is relatively small for capital projects (whi ch typically have much greater funding needs due to the size and cost of such projects), and the Federal funds have various program and reporting requirements that may be challenging for recipients to administer.
Last year, the City had the opportunity to partner with the County to acquire and rehabilitate the Crestview Hotel (Crestview) for permanent affordable housing. As noted above, it has been difficult in the past to find capital projects through the NOFA process. Additionally, HUD asks jurisdictions to maximize the leverage of other funds to the extent possible. HUD allows entitlement jurisdictions to directly allocate funding to projects —instead of through a NOFA process—that align with the City’s Consolidated Plan goals. As such, the City did not release any Fiscal Year 2021 -22 capital projects NOFA for CDBG and HOME funds and, instead, directly allocated $3.7 million in Federal funding to the Crestview project.
In the time since the HRC recommended this funding last year, the City and County have continued to move forward on the project. In addition to the City’s $3.7 million, the County has committed $7 million in Measure A funds to the project and has also submitted an application to the State Project HomeKey program for key funding needed to acquire the hotel. In addition, Crestview will require renovations to add kitchenettes and community spaces as well as to combine some units into multi-bedroom units for families. The City and County have held several community meetings to get feedback on the proposed effort. The City and County are currently in the process of selecting a no nprofit developer. The selected developer will submit a renovation scope of work and pro forma. However, at this time, it is anticipated that the project will require additional funding to make the project viable.
As a result, it is recommended that the Fiscal Year 2022 -23 AAP follow the same process as last year and directly allocate $1,509,789 to the Crestview project. This includes the Fiscal Year 2022-23 capital funds estimated for CDBG ($390,000) and HOME ($243,000), unallocated CDBG ($248,112) and HOME funds ($428,677), and anticipated CDBG ($100,000) and HOME ($100,000) Program Income. If the actual CDBG or HOME funding for Fiscal Year 2022-23 differs from the estimated amount, and if the City receives additional Program Income during Fiscal Year 2021-22, the amount allocated for the Crestview Hotel project will be adjusted accordingly.
Should the ultimate scope of work and budget submitted by the selected developer not require some or all of the funding, it is recommended that the funding be reallocated to another Funding Recommendations for Fiscal Year 2022-23 Annual Action Plan April 26, 2022
affordable housing project in the City’s extensive project pipeline to meet Consolidated Plan goals.
Annual Action Plan
The Fiscal Ye ar 2022-23 AAP is attached to this report as Attachment 1. The AAP contains a description of the planned allocations of the City’s CDBG and HOME funds, existing resources, public noticing efforts, housing and public services efforts, and goals. The funding allocations reflect the recommendations above, with appropriate goals to match the funding. Very little of the AAP has changed from last year as the AAP reflects the larger five -year 2020 -2025 Consolidated Plan and the second year of the two-year Public Services funding cycle.
FISCAL IMPACT
Approval of the Fiscal Year 2022 -23 AAP will not impact the General Fund. All public services in the second year and the City’s funding for the capital project will be from CDBG and HOME funds.
Funding Recommendations for Fiscal Year 2022-23 Annual Action Plan April 26, 2022
PUBLIC NOTICING
The Fiscal Year 2022-23 Annual Action Plan was posted on the City website at mountainview.gov/neighborhoods on March 28, 2022. Advertisements of the opening of the public comment period were placed in the Mountain View Voice and Palo Alto Daily Post , with links to the same notice in Spanish, Russian, and Chinese. English and translated notices were also physically posted at City Hall and the Library. Notices were also sent to interested parties per the City’s Citizen Participation Plan.
The Human Relations Commission heard the staff recommendation on April 7, 2022. The Commission unanimously recommended approval of the Annual Action Plan.
Prepared by:
Micaela Hellman-Tincher
Housing and Neighborhood
Services Manager
Wayne Chen
Assistant Community Development
Director
Approved by:
Aarti Shrivastava
Assistant City Manager/Community
Development Director
Kimbra McCarthy
City Manager
MHT-WC/4/CAM
843-04-26-22CR-1
201627
Attachments: 1. Fiscal Year 2022-23 Annual Action Plan
2. Fiscal Year 2022-23 Public Services Allocations