TO: HONORABLE MAYOR AND FROM: Jacky Morales-Ferrand
CITY COUNCIL
SUBJECT: FISCAL YEAR 2022-2023 ANNUAL DATE: February 28, 2022
ACTION PLAN PRIORITIES
Approved Date
3/11/22
RECOMMENDATION
Hold a public hearing on funding priorities for the Fiscal Year 2022-2023 Annual Action Plan for the use of federal funds from the U.S. Department of Housing and Urban Development (HUD), and provide Housing Department (Housing Department) staff with input on the proposed funding priorities for the City’s next Annual Action Plan.
OUTCOME
The goal of this publicly-noticed hearing and the presentation to the City Council is to give the public and the City Council an opportunity to provide comment on funding priorities for the City’s Annual Action Plan for FY 2022-2023.
BACKGROUND
As an entitlement jurisdiction, the City receives federal formula grants each year from HUD for a variety of housing and community development activities. The amount that the City receives each year is based on several factors including population, poverty levels, and housing statistics.
Five-Year Consolidated Plan
Every five years, HUD requires jurisdictions that receive federal funding by formula to develop a Five-Year Consolidated Plan. The Five-Year Consolidated Plan identifies priority needs, goals, actions, and funding strategies for its four federal housing and community programs: 1) Community Development Block Grant (CDBG); 2) HOME Investment Partnerships Program (HOME); 3) Emergency Solutions Grant (ESG); and 4) Housing Opportunities for Persons With AIDS (HOPWA).
COUNCIL AGENDA: 3/22/22
FILE: 22-362
ITEM: 8.1
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
On August 11, 2022, the City Council approved the City’s 2020-2025 Consolidated Plan, which identified four categories as areas of greatest need within the community and identified broad project goals to address these needs. The four priority categories of need are:
1. Prevent and Address Homelessness – Increase housing opportunities and self- sufficiency for homeless populations and assist in the prevention of homelessness for at- risk individuals and families.
2. Create and Preserve Affordable Housing – Create new affordable housing opportunities and preserve existing affordable housing.
3. Promote Fair Housing – Promote fair housing and lowered barriers to housing.
4. Strengthen and Stabilize Communities – Strengthen and stabilize communities’ condition and help to improve residents’ ability to increase employment prospects and grow assets.
All activities funded with the federal funding programs must support one or more of these four priorities identified in the 2020-2025 Consolidated Plan.
Annual Action Plan
In accordance with the federal funding requirements, the City prepares an Annual Action Plan to document how it plans to utilize its federal resources each year. An Annual Action Plan outlines one-year strategies that will keep the City on track to meet its Five-Year Consolidated Plan goals. Included in Annual Action Plans are funding recommendations for specific actions and activities for each of the four federal funding sources. Annual Action Plans also describe how the City will support the goals and meet the needs identified in the Five-Year Consolidated Plan.
Prior to an Annual Action Plan’s final approval by the City Council, the Housing Department must provide for a 30-day public review of a draft Annual Action Plan. In accordance with the City’s Citizen Participation Plan, the Housing Department must provide three public hearings on draft Annual Action Plans to create an opportunity for public comment.
Federal Funding Sources and their Uses
San José receives four major sources of federal funding annually from HUD, as listed in Table 1.
Each of these sources is distinct and supports specific housing and community development needs. The primary use for each fund and the amount that is projected to be allocated for fiscal year (FY) 2022-2023 are also listed in Table 1. Note that FY 2021-2022 funding levels are used in Table 1 as a general estimate of next year’s allocations, net of any estimated program income from loan repayments:
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
Table 1: Estimated FY 2022-2023 San José Federal Funding Levels Funding
Source
Primary Use Estimated Allocations
for FY 2022-2023
CDBG Housing and Community Development Programs,
Services, and Capital Improvements $8,761,415
HOME Housing $3,221,675
ESG Homeless Services and Shelter Operations $763,052
HOPWA Housing Support for Persons with AIDS $1,553,405
Total $14,299,547
Regulatory requirements for the use of HOME, ESG, and HOPWA are specific: HOME funds must be used to create affordable housing opportunities; ESG funds must be used to support efforts addressing homelessness; and HOPWA funds must be used for housing and services for individuals with AIDS or HIV. CDBG is the most flexible federal funding source and may be used to fund a wide range of housing and community development needs. For this reason, funding priority decisions usually focus on the use of CDBG.
ANALYSIS
Given the City’s additional responsibilities to administer approximately $200 million in grant funds during the COVID-19 pandemic, staff has had extremely limited capacity and, therefore, proposes the activities outlined below, which will continue the current year’s funding priorities.
CDBG Priorities
CDBG funds can be used for a variety of services for low-income individuals. Program regulations limit funding for public services to 15% of the annual CDBG allocation combined with the prior year’s program income from loan repayments. Services are generally funded on a three- to five-year funding cycle to provide predictability in service delivery and to support service providers’ organizational capacity. The amounts allocated reflect not only the City’s priorities, but also the actual costs to deliver eligible programs and the staff capacity of the grantee organizations.
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
Staff proposes the activities outlined in Table 2 continue under current service agreements, with individual funding levels approximately comparable to the levels from last fiscal year:
Table 2: Proposed CDBG-funded Public Services
CDBG Activities Description FY 2021-2022
Funding
Status
Recommendation
Approximate
% of
Category*
Senior Services Meals and support
programs
$200,000 Continue funding 15%
Neighborhood
Engagement and
Leadership Training
Leadership
development and
engagement training
$200,000 Continue funding 15%
Services for Homeless
and Unhoused
Populations
Citywide outreach and
shelter
$399,097 Continue funding 29%
Legal Services Citywide legal services
for low-income
tenants and landlords
$475,115 Continue funding 35%
Fair Housing** Fair housing services $100,000 Continue funding 7% Total $1,374,212 100%
*Note: Totals do not equal 100% due to rounding.
**Note: The Fair Housing agreement would be split between CDBG Public Services, CDBG Program Administration, and HOME funding for a total of approximately $633,000 (same as FY 2021-2022).
In addition to the recommendations for CDBG Public Services, the Housing Department also proposes to recommend that the City continue to provide Community Development Investment (CDI) funding for the eligible activities listed in Table 3 below:
Table 3: Proposed Community Development Investment Activities Activity Description FY 2021-
2022
Funding
Status
Recommendation
Approximate
% of Category*
Minor Home
Repairs
Owner-occupied single-family
home and mobilehome repairs
$1,650,000 Continue funding 27%
Job Training and
Placement
Job training and placement for
homeless individuals; housing
assistance
$500,000 Awarded in
FY 2020-2021 -
Continue funding
8%
Enhanced Code
Enforcement
Proactive City Code Enforcement
focusing on multifamily housing
issues in Project HOPE
neighborhoods
$1,100,000 Continue funding 18%
Place-based Street
and Infrastructure
Enhancements
Investments in City infrastructure
such as Wi-Fi systems and
walkability improvements;
especially those located in
extremely low-income census
tracts reflected as areas of racially
$2,484,920 $2,784,920
46%
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
Activity Description FY 2021-
2022
Funding
Status
Recommendation
Approximate
% of Category*
and ethnically concentrated areas
of poverty; and proximate to
supportive housing developments
for formerly homeless residents
Acquisition,
Rehabilitation, and
Infrastructure
Improvement
Projects
Acquisition, rehabilitation, and
infrastructure improvements for
affordable housing sites, and
public and nonprofit facilities
$300,000 No projects known
at this time that
need this amount
and could spend
fully in FY 2022-
2023; reallocate to
Place-based Street
and Infrastructure
0%
Total $6,034,920 $6,034,920 100%
*Note: Totals do not equal 100% due to rounding.
If there are no shovel-ready acquisition, rehabilitation, infrastructure, or facilities projects proposed, CDI infrastructure projects sponsored by the City will be considered for funding if monies are available. As part of the public outreach process, Housing Department staff are working collaboratively with the City’s Manager’s Budget Office and other City departments to determine which CDI projects to propose for funding and will bring these recommendations to the City Council for approval. These projects could include, but are not limited to, improvements to a City-owned swim center, community center, park, and/or nonprofit facilities; the purchase of fire station equipment serving eligible low-income areas; or new infrastructure investments such as street trees in low-income areas experiencing heat effects.
The Housing Department evaluates CDI capital projects based on funding availability, project readiness, public feedback, and uses’ alignment with stated Five-Year Consolidated Plan objectives and CDBG eligibility rules. Readiness includes the ability to spend all allocated funds promptly, preferably within the fiscal year, including obtaining project environmental clearances for the use of federal funds prior to funding commitment.
In addition to the annual allocation amount of CDBG, the Housing Department typically receives approximately $400,000 in program income from repayments of existing CDBG-funded loans.
The remainder of the annual allocation, plus what is received in CDBG program income, would be spent on administrative costs and fair housing.
HOME, ESG and HOPWA Priorities
For the non-CDBG federal funds, staff intends to define activities for the FY 2022-2023 Annual Action Plan that continue the current allowed uses for these funds. For HOME, this includes fair housing services and the development of restricted affordable apartments. Funds not allocated to tenant-based rental assistance would be reallocated to development of restricted affordable apartments for next fiscal year. For ESG, allowed uses are proposed to remain the same:
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
homelessness prevention services; citywide outreach to homeless people; and support for the County of Santa Clara’s information system that captures data on homeless residents served. For HOPWA, allowed uses includes rent and supportive services programs for eligible homeless and at-risk populations.
CONCLUSION
Taken together, the four identified priority funding areas and potential programs could help San José’s residents and communities to meet their needs and could help them to become more resilient so they may better cope with the City’s changing market forces. These funding priorities are responsive to needs identified by the community and are consistent with existing City priorities.
EVALUATION AND FOLLOW-UP
Staff will complete the draft 2022-2023 Annual Action Plan in spring 2022, and upon completion, will make a copy available to the public for review for 30 days. Officially noticed public hearings on the draft 2022-2023 Annual Action Plan will include one Commission meeting and two City Council meetings to be held in April and May 2022. Staff then will submit the final 2022-2022 Annual Action Plan to HUD by its deadline in mid-May 2022.
CLIMATE SMART SAN JOSE
The recommendation in this memorandum has no effect on Climate Smart San José energy, water, or mobility goals.
PUBLIC OUTREACH
Two public hearings will be held on this funding priorities item: 1) at the Housing and Community Development Commission meeting on March 10, 2022 and 2) at the City Council meeting on March 22, 2022. These two hearings surpass the City’s Citizen Participation Plan1 requirement to hold one publicly noticed hearing on funding priorities prior to drafting the 2022- 2023 Annual Action Plan. Both provide the public an early opportunity to comment on the potential uses of the City’s anticipated federal funds. Three public meetings to be held on the draft 2022-2023 Annual Action Plan, with advance notice to the public and directions on how to submit comments, to provide more opportunities for public feedback.
The public notice containing information about this City Council hearing and the Commission’s hearing on March 10, 2022, was published in the Mercury News on February 19, 2022. Staff also sent email announcements to over 2,600 organizations and individuals concerned about
1 San José’s Citizen Participation Plan for U.S. Department of Housing and Urban Development Programs, amended Aug. 4, 2020, p.9, https://www.sanjoseca.gov/home/showpublisheddocument/64406/637369832783670000.
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
affordable housing and community development issues, including staff contact information for questions in Spanish, Vietnamese, and Chinese. The announcement of these two public hearings was also placed on the Housing Department’s website at www.sjhousing.org. This memorandum will also be posted on the City Council’s website for the meeting on March 22, 2022. This outreach surpasses what is required by the City’s Citizen Participation Plan for annual funding priorities.
For all public hearings related to development of the 2022-2023 Annual Action Plan, City staff sends widely distributed e-mail announcements, including staff contact information for questions in Spanish, Vietnamese, and Chinese, and publishes on the Housing Department’s website. In addition, for the upcoming draft annual action plan hearings, staff will follow the City’s Citizen Participation Plan and publish a notice in the Mercury News or San José Post Record. The City also will translate the notice into Spanish, Vietnamese, Chinese, and Tagalog, and publish it in the El Observador, Vietnam Daily News, World Journal, and the Asian Journal newspapers.
COORDINATION
This memorandum was coordinated with the City Attorney’s Office and the City Manager’s Budget Office.
FISCAL/POLICY ALIGNMENT
/
The proposed funding priorities are consistent with the City's 2020-2025 Consolidated Plan adopted by the City Council on August 11, 2020, and with the City's Adopted Housing Element 2014-2023, in that the action provides services to very low-income households. It also advances the Community Plan to End Homelessness 2020-2025, approved by the City Council in February 2020.
COST SUMMARY/IMPLICATIONS
There are no cost implications for this action. The draft 2022-2023 Annual Action Plan, which the City Council will be asked to approve separately later in spring 2022 and will incorporate feedback given on this memorandum, will be the actual spending plan for the City’s federal formula funds received each year from HUD.
COMMISSION RECOMMENDATION/INPUT
This item is scheduled to be heard by the Housing and Community Development Commission at its meeting to be held virtually on March 10, 2022 at 5:45 p.m. A Supplemental Memorandum
HONORABLE MAYOR AND CITY COUNCIL
February 28, 2022
Subject: Fiscal Year 2022-2023 Annual Action Plan Priorities
summarizing the Commission’s feedback will be included in the amended March 22, 2022, City Council meeting agenda.
CEQA
Not a Project, File No. PP17-007, Preliminary direction to staff and eventual action requires approval from decision-making body.
/s/
JACKY MORALES-FERRAND
Director of Housing
The principal author of this memorandum is Kristen Clements, Division Manager. For questions, please contact her at [email protected], (408) 535-3850.