City Council
Report
City Council Meeting: June 25, 2019
Agenda Item: 3.E
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To: Mayor and City Council
From: David Martin, Director, Building & Safety
Subject: Adopt Grant Resolution - Hazard Mitigation Grant Program Recommended Action
Staff recommends that the City Council adopt the attached resolution authorizing:
1. The submittal of a Hazard Mitigation Grant Program (HMGP) sub-application to CalOES/FEMA requesting grant money to fund a program that will assist property owners with the retrofit of seismically vulnerable soft-story buildings.
2. The City Manager, or designee, to execute all necessary documents associated with this HMGP, or subsequent HMGP applications, to apply for the grant, accept the grant, if awarded, and accept all grant renewals, if awarded.
Summary
The City of Santa Monica in 2017 implemented one of California’s most comprehensive efforts to mandate seismic safety strengthening of vulnerable buildings. The Planning and Community Development Department seeks to submit a Hazard Mitigation Grant Program (HMGP) application requesting up to $6.75 million from the Federal Emergency Management Agency (FEMA). Securing a FEMA grant would encourage property owners’ timely compliance with the City’s seismic retrofit program and increase the number and pace of completed retrofits in the City. Council authorization to submit the application is required as part of the submittal.
The application submittal deadline is July 5, 2019. The final amount of an awarded grant could be less depending on the number of applications received by FEMA. An awarded grant authorizes the funds for a period of three years. If awarded, the grant money will be used to assist (i.e. reimburse) property owners with a percentage of the costs to retrofit seismically vulnerable soft-story buildings. A portion of any awarded money would also be used towards administrative and operating costs of managing the retrofit program. Options for managing the program are still under consideration and may 2 of 6
include hiring a consultant or reallocating existing resources for the duration of the grant period and any subsequently awarded grant periods.
Discussion
The State of California Office of Emergency Services (CalOES) is eligible for FEMA Hazard Mitigation Grant Program (HMGP) funding as a result of the declaration of a federal disaster for the 2018 wildfires in Butte, Ventura, and Los Angeles counties. The HMGP is aimed at providing funding for projects that reduce or eliminate the impacts of future disasters, including the mitigation of earthquake hazards. Funding from HMGP grants does not need to be used to mitigate the specific disaster that initiated the emergency declaration.
The City implemented its Seismic Retrofit Program (‘Program’) in March 2017, where nearly 2,000 commercial and multi-family residential buildings were identified as potentially seismically vulnerable in need of structural retrofit. The Program mandates compliance timeframes, depending on building type, in which a property owner must complete a structural retrofit. The requested FEMA grant, if awarded, would provide reimbursable funds to property owners for design, engineering, and construction costs associated with retrofitting their properties in compliance with the Program. Funding assistance would incentivize property owners and increase the number and pace of completed building retrofits, which is the goal of the Program. Lastly, awarded grant money would also provide the City with funds to assist with administrative, monitoring, and operating costs to improve the success of the Program.
The City has contracted with m6 Consulting for services associated with the HMGP, including preparation of the subapplication, the required benefit-cost analysis, and assistance with the development of the grant program. m6 has provided similar services to the cities of West Hollywood, Beverly Hills, and Oxnard in completing FEMA HMGP application submittals. Costs associated with m6’s consulting services are considered reimbursable costs by FEMA should the grant be awarded. 3 of 6
City’s Financial Commitment
Pursuant to the FEMA grant requirements, the City must commit to a 25% match in funding. The requested$6.75 million grant would require a City match of $2.25 million for an overall project budget of $9 million. Property owners participating in the grant program would fund a significant portion of the City match. FEMA considers the money spent by property owners on the balance of a retrofit project after grant subsidization to qualify towards the City’s local match commitment. A portion of the required local match would also be met through already budgeted expenses incurred by the City in administering the grant program, including staff/consultant time dedicated to program management, plan review, permit-related services, and inspections.
The local grant program will be developed in a manner where staff time spent on the program, including plan review and permitting costs, will be tracked closely; and, the reimbursement amounts to property owners will be established at a level that ensures the 25% local match is appropriately met entirely through these activities. A letter from the City Manager’s office committing to meet the local match requirements of at least 25% is required to be submitted with the application and is included as Attachment A to this report.
Subapplication Review Process
CalOES acts as the applicant to FEMA in the grant process for the HMGP. The City serves as the subapplicant. The deadline for the City to submit the subapplication to CalOES is July 5, 2019. The deadline for CalOES to submit the application to FEMA is November 12, 2019. Subapplications are reviewed by CalOES to ensure minimum criteria are met and the most cost-effective projects are selected for funding. CalOES’ review criteria include the adoption of a Local Hazard Mitigation Plan, a satisfactory cost-benefit ratio, details of how a project independently achieves hazard mitigation, and demonstrating the ability to complete the project within the grant’s 36-month performance period.
Following the submittal of the subapplication to CalOES, a series of requests for Information (RFI) to the City may occur to clarify or supplement information in the effort 4 of 6
towards preparing the most desirable program application to forward to FEMA. Once CalOES completes its review the subapplication is forwarded to FEMA to verify for compliance with federal laws and regulations. A key element of FEMA’s review is a ‘benefit-cost analysis’ that is used to determine the cost-effectiveness of the project.
The FEMA review process can typically take between 4-6 months. Therefore, the City expects grants to be awarded in spring 2020 (is this right?) Proposed Retrofit Grant Program
The Retrofit Grant Program proposed is a rebate program that will assist property owners of soft-story buildings identified as Priority 2 (more than two stories and less than 16 units) and Priority 3 (16 or more units) building types in the City’s Seismic Retrofit Program. Priority 2 and Priority 3 building types were selected for this grant program because of the compliance dates for when these retrofits must be completed, and due to the characteristics of these building types and their ability to achieve the required benefit-cost ratio required by FEMA for grant eligibility.
Interested property owners of Priority 2 and Priority 3 buildings would submit an application to the City expressing an interest in participating in the rebate program.
Upon City confirmation of a project’s eligibility, applications will be forwarded to FEMA for review and funding approval. An environmental and historic preservation regulatory compliance review by FEMA will occur as part of its project approval process. FEMA approval is required prior to permit issuance and commencing construction. Pursuant to FEMA funding guidelines, grant money may only be used for projects that have not started construction at the time of FEMA’s approval of the project. Retrofit projects that have already begun construction or have been completed are ineligible for FEMA reimbursement.
Reimbursement to property owners of FEMA-approved applications is broken up into two phases. The first is for reimbursement of a percentage of the costs associated with retrofit design, such as hiring an engineer and developing construction drawings and structural calculations. The second is for reimbursement of construction costs such as hiring a contractor, construction materials, and third party inspections. FEMA requires 5 of 6
that projects are completed within 36 months of FEMA approval prior to issuance of reimbursement. The compliance dates established in the City’s seismic ordinance for Priority 2 and Priority 3 building types requires retrofit work to be completed by September 2023, and October 2023, respectively, which align closely with FEMA’s 36- month requirement and an expected award date of early 2020 for this grant application.
The exact amount of each rebate will be determined through a City screening process and will be based on the number of applications submitted to the City from interested property owners. It is anticipated that design rebates may be up to $5,000 or 75% of design cost, whichever is less; and construction rebates may be up to $17,000 or 40% of construction costs, whichever is less.
Grant money received for the Retrofit Grant Program would also be used to fund the City’s administrative and operating costs of managing the grant program. The logistics of how the program will be managed are still under consideration and may include the hiring of a consultant or the reallocation of existing resources for the duration of the three-year grant period, and any subsequently awarded grant periods. A primary responsibility of this role would be to ensure the program maintains compliance with FEMA requirements.
Other Funding Sources
Later this year another HMGP application period will open for funding associated with a different federal disaster declaration. The Building & Safety Division will continue to monitor CalOES’ website to submit another NOI to request additional funding for the retrofit of other building types in the City. Additional analysis will be required to determine whether other building types subject to the City’s seismic retrofit program, such as Priority 5 (soft-stories, 7 to 15 units) and Priority 6 (soft-stories, less than 7 units) can achieve the benefit-cost ratio required by FEMA for grant funding eligibility.
According to CalOES staff and discussions with the City’s grant-writing consultant, it has proven difficult to obtain the required ratio for soft-story buildings of 15 units or less.
Nevertheless, staff will continue to explore this opportunity to assist property owners where possible.
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Financial Impacts and Budget Actions
Staff seeks authority to apply for a Hazard Mitigation Grant from FEMA to assist property owners with the costs to retrofit seismically vulnerable buildings. If awarded, staff will return to Council for specific budget actions.
Prepared By: Ariel Socarras, Building and Safety Manager Approved Forwarded to Council
Attachments:
A. Attachment A - Local Match Fund Commitment Letter
B. Resolution
C. Written Comments