FOR THE COUNCIL MEETING OF APRIL 2, 2024
COUNCIL AGENDA REPORT
TO: City Council
FROM: Interim City Manager Alex Posada
BY: Interim Assistant City Manager / Director of Community Development Chuen Wu
SUBJECT: Block Grants Advisory Committee’s Recommendations for Fiscal Year 2024-25 C ommunity Development Block Grant Program Drafted Action Plan
Description:
The City Council will review, allocate, and approve the overall allocations and contingencies which make up the drafted Fiscal Year 2024-25 Community Development Block Grant Action Plan.
Environmental Notice: This activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATION:
The City Council will:
1. Conduct a public hearing to receive comments from the public as part of the drafted Fiscal Year 2024-25 Community Development Block Grant Action Plan 30-day public review period; and
2. Consider the Block Grants Advisory Committee’s recommendation for the allocation of Fiscal Year 2024-25 Community Development Block Grant Program Public Services and Capital funds; and
3. Allocate its $37,500 to Public Services programs; and
4. Review and approve the overall allocations and contingencies which make up the drafted Fiscal Year 2024-25 Community Development Block Grant Action Plan. The final approval of the draf ted Action Plan is anticipated to take place following the 30-day public review period on Tuesday, May 7, 2024.
BACKGROUND:
The Community Development Block Grant ( CDBG) Program is the primary Federal program that provides state and local governments wi th grant funds for local programs and projects to address a variety of complex physical and social needs in the community. 2 The main objective of the program is to develop viable urban communities by providing decent housing and a suitable living environment.
While the program is administered by the U.S. Department of Housing and Urban Development (HUD), the funds may be used at the discretion of the City, if the City’s activities comply with Federal regulations and meet one of the three national objectives.
The national objectives are: 1) benefit primarily low - and moderate-income persons; 2) prevent or eliminate slums or blight; or 3) meet an urgent community-wide need, such as caused by a major catastrophic event (i.e. flood, earthquake, etc.).
The City has participated as an entitlement community in the CDBG Program for 50 years.
As an entitlement community, every year the City automatically receives funding that is based on a HUD formula that includes factors such as population growth, level of poverty, age of housing, and extent of overcrowding.
The annual allocation process involves the development of an Annual Action Plan. HUD requires submittal of this document for the City to receive CDBG funding. The City Council-appointed Block Grant Ad visory Committee (BGAC) oversees the process that includes an assessment of the needs in the community, development of funding priorities, review of funding applications, site visits, and recommendation of allocations.
Application Process Overview
The BGAC conducted a community needs meeting on Monday, July 31, 2023, to receive comments from the public and discuss the needs and priorities in the community.
Participants spoke about the increased need to continue funding programs and projects that assist the homeless, youth, and those suffering from abuse, mental health, and/or trauma. The needs expressed are reflected in the existing CDBG funding priorities; therefore, the BGAC recommends no changes be made to the priorities outlined in the City’s Five-Year Consolidated Plan. The Fiscal Year (FY) 2024-25 priorities were adopted by the City Council during the August 15, 2023, City Council meeting.
A Notice of Funding Availability and request for applications was issued on Thursday, August 17, 2023 , and a mand atory pre -application workshop was conducted on Thursday, October 19, 2023. Applications were due on Wednesday, December 6, 2023, for both Public Services and Capital. Staff received 18 applications for Public Services and 5 applications for Capital funding. Also, as part of the Capital funding request is the City’s request for funding to assist with the administrative costs associated with its Tenant-Based Rental Assistance security deposit program.
The BGAC split into five teams to conduct site visits which consisted of an in-depth review of each application. Each team had access to financial statements, tax returns, and audit information pertinent to each applicant. Before deliberations, each team obtained additional background information from the appl icants and developed a written team report which was shared with the rest of the Committee.
3 The deliberation process was divided into two separate public meetings. The first meeting took place on Monday, February 1 2, 202 4. Applicants were allowed to go before the Committee to answer any additional questions related to its application. The second deliberation meeting took place on Thursday, February 15, 2024. The public was allowed to observe the deliberation process , but not speak before the Commit tee. Committee members participated in a survey to rank the public service applications and discussed funding allocations based on the collective results. Committee members did not conduct a survey to rank the capital project applications as the City Council prioritized the capital projects during the City Council meeting on Tuesday, October 3, 202 3. Instead, Committee members discussed the applicants, utilized the information gathered and provided by staff, and voted on the recommendations that are being presented to the City Council (Attachments F and G).
DISCUSSION:
The BGAC evaluated and ranked the proposals by applying the adopted priorities for FY 2024-25 (Attachment B) as an overlay to the Federal Guidelines for Eligibility (Attachment C), and the Additional City Criteria for CDBG Public Service Funding (Attachment D) as developed by the BGAC. Additional criteria (Attachment E) considered in the rankings of capital development and affordable housing projects included project readiness, financial feasibility, cost efficiency, administrative capacity, local track record, and past program performance. Also considered is the staff analysis report which recaps the applicants’ CDBG administrative performance (Attachment H). Since the City is ultimately responsible for the performance of all subrecipients , it is important to document an agency’s ability to manage CDBG funds and share the information with both the applicant and decision-makers.
Public Hearing
The purpose of this public hearing is to receive public testimony concerning the recommendation of the BGAC for the allocation of FY 2024-25 CDBG funds. This year’s process marks the fifth time in which $37,500 of Public Service money is set aside for the City Council to allocate directly ($7,500 for each Councilmember). With the $7,500 to each Councilmember, he/she can add to a Public Service agency that is recommended for funding or combine the allocation ($7,500) with another Councilmember to provide funding to an organization that the committee did not recommend funding to (thereby keeping the minimum allocation to at least $15,000). There is currently a cap of $20,924 (10 percent of the overall Public Service funding) for any activity.
Once the City Council makes its recommendations and approves the existing BGAC and staff recommendations, staff will present these recommendations to the City Council for final approval on Tuesday, May 7, 2024. However, if HUD delays the release of the City’s final CDBG al location numbers, the final approval will be pushed to a later date. Once final approval has been issued, the City’s drafted Action Plan will be submitted to HUD.
Public Services
Regarding public services, the BGAC focused on programs and projects that address basic human necessities, meet critical emergency needs, assist the elderly, and prevent 4 homelessness (Attachment F). Of those applications, 10 of the 18 Public Services applicants are recommended for funding. Due to the l imited amount of funding, eight applicants were not recommended for funding. Staff and the BGAC recognize that all the agencies provide excellent and needed services throughout the community; however, there is limited funding available. Each agency’s overa ll program budget was taken into consideration to ensure that even without the CDBG funding, the program could still be sustained, and services could still be maintained, at least at some level. The BGAC adopted contingencies for Public Services funding are as follows:
Increase in funding: Should the City receive more CDBG funding than anticipated and is between $0 and $14,999, the funding will be distributed evenly to each agency with a recommendation under $20,000 (up to the funding cap). If the City receives $15,000 or more for public services, the funding will be allocated to Fighting Back Santa Maria Valley (FBSMV). If the City receives more than $15,000 and under $30,000, the additional funding will be allocated to FBSMV and then evenly distributed to agencies receiving under $20,000. The top four funded agencies will not be increased at that time. If more than $30,000 is received, funding will be allocated to FBSMV and Family Service Agency (FSA) for its Long- Term Care Ombudsman program.
Decrease in funding: Should the City receive less CDBG funding than anticipated and is below $20,000, the top four agencies will be reduced evenly. If the amount received is less than $30,000, funding will be removed from Independent Living Resource Center and then reduced evenly from the top four agencies.
CDBG Capital
During the Tuesday, October 3, 2023, City Council meeting, direction was provided by Councilmembers as to how the proposed Capital projects should be ranked in order of priority. At that meeting, the City Council expressed interest in all the proposed projects, with the top projects being the Sports Complex, the minor home repair programs, and the Unhoused TAY (Transitional Age Youth) Navigation Center (Attachment G).
Since the City does not know exactly how much CDBG funding it will receive this year, the BGAC adopted contingencies to assist in the allocation process and avoid delaying the City’s ability to submit an approved Action Plan on time to HUD. For Capital funding, they are as follows:
Increase in funding: Should the City receive more CDBG funding than anticipated, it will be allocated to the City’s Community Sports Park.
Decrease in funding: Should the City receive less CDBG funding than anticipated, funding will be removed eve nly from the City’s project, CommUnify, Community Action Partnership of San Luis Obispo County, and FSA, with a maximum five percent deduction cap. If there is a reduction that exceeds that amount, the remaining amount will be removed from the City’s project.
Alternative(s)
5 The City Council can choose to amend the allocations, adopt new allocation amounts, and/or propose different agencies to receive funding, if the changes stay within the parameters adopted by the City Council and HUD.
Fiscal Considerations
The proposed action will provide an estimated $1.4 million in Federal funds for social services, affordable housing opportunities, and public facilities that will help relieve pressures on the City’s General Fund.
Impact to the Community
The proposed action will have a positive impact by providing services, facilities, and infrastructure that will help the neediest individuals in the community. Specifically, the proposed action will address key issues facing the community by providing emerge ncy assistance to homeless and special needs populations, expanding services for at -risk youth, providing opportunities for sustainable affordable housing, revitalizing neighborhoods, and improving the community’s public facilities and infrastructure. These recommendations are included in the drafted Annual Action Plan for FY 2024 -25. To review the document, which is undergoing a 30 -day public review period from Friday, March 29 to Sunday, April 28, 2024, visit the City’s website at www.cityofsantamaria.org.
ATTACHMENTS
Attachment A – Available Funding
Attachment B – Priorities for Fiscal Years 2024-25
Attachment C – Federal Guidelines for Eligibility
Attachment D – Additional City Criteria for CDBG Public Service Funding Attachment E – Additional Criteria Considered
Attachment F – Public Service Recommendations
Attachment G – Capital Recommendations
Attachment H – Staff Analysis