City of Sunnyvale
Agenda Item
22-0292 Agenda Date: 4/20/2022
REPORT TO HOUSING AND HUMAN SERVICES COMMISSION
SUBJECT
Consider Approval of Draft 2022 Housing and Urban Development (HUD) Action Plan
REPORT IN BRIEF
The City must submit an Action Plan to HUD every year in order to receive federal entitlement grants from the Community Development Block Grant (CDBG) and the HOME Investment Partnerships (HOME) Programs. HUD is the federal agency that administers and regulates these grants. The draft 2022 HUD Action Plan (“Action Plan”), provided as Attachment 2, has been prepared in accordance with federal requirements governing the use of these entitlement grants, including the citizen participation requirements. The Action Plan sets forth the proposed uses of the CDBG and HOME funds projected to be available in the coming fiscal year, as shown in Table 1 below in the Discussion section of this report. These funds may be used for eligible community development activities to meet the priority and/or unmet needs, primarily of lower-income residents, as described in the City’s HUD Consolidated Plan. Two Request for Proposals (RFP) were issued (CDBG Capital Projects and HOME Tenant Based Rental Assistance Administrator) for these funds in December 2021 and a total of four applications were received. Once approved by the City Council, the Action Plan will be submitted to HUD no later than May 15, 2022.
The City Council is scheduled to consider this item on May 3, 2022.
BACKGROUND
HUD requires entitlement grantees (cities, counties and states) to submit an application, referred to as a “Consolidated Plan”, every five years, to maintain eligibility for CDBG and HOME Program grants. Sunnyvale’s last Consolidated Plan was approved in 2020 and covers fiscal years 2020/21 through 2024/25. In addition, every year entitlement grantees must submit an annual “Action Plan” to HUD for its approval to obtain the grant for the coming fiscal year. Action Plans are required to describe the grantees’ local needs and the projects and programs to be funded with the grant funds in the coming fiscal year. Upon HUD approval, the annual Action Plans are appended to the five-year Consolidated Plan.
CDBG and HOME Programs
The CDBG program was established by the Housing and Community Development Act of 1974, Public Law 93-383; and the HOME Program was established by the National Affordable Housing Act of 1990. These programs provide annual grants to jurisdictions to enable them to “develop viable urban communities by providing decent housing, a suitable living environment, and expanding economic opportunities, principally for low and moderate-income persons.” CDBG regulations define “low and moderate” as households earning not more than 80% of area median household income, or what the State of California and the City refer to as “lower-income households”. The CDBG and HOME lower-income limits are established annually by HUD and is currently set at $117,750 for a
Attachment 1
22-0292 Agenda Date: 4/20/2022
household of four in the Sunnyvale-San Jose metropolitan area, with adjustments for larger or smaller households. To be eligible for most types of CDBG or HOME assistance, the household’s gross annual income cannot exceed that amount.
CDBG Eligible Uses HOME Eligible Uses
Activities that “principally benefit” lower-
income households, such as: housing
rehabilitation, public facilities and
infrastructure, public services, energy
conservation, economic development, and
job creation/retention.
Activities that fund lower-income housing
efforts, include: construction, rehabilitation,
and acquisition of affordable housing, first-
time home buyer assistance, and tenant-
based rental assistance.
EXISTING POLICY
City of Sunnyvale 2020-2025 HUD Consolidated Plan
Goal A Assist in the creation, improvement, and preservation of affordable housing for lower- income and special needs households.
Goal B Alleviation of Homelessness .
Goal C Support provision of essential human services, particularly for special needs populations.
Goal D Expanding Economic Opportunities .
Council Policy 5.1.3, Human Services
The City shall make its best efforts to provide supplemental human services, which include but are not limited to emergency services, senior services, disabled services, family services, and youth services.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378 (b) (4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment. The action is also exempt under the National Environmental Policy Act (“NEPA”) pursuant to 24 CFR 58.34 (a)(1) and (3) as it relates to the development of plans and strategies and is an administrative and managerial activity. Although site- specific projects may be identified in the Action Plan, approval of the Plan does not constitute a formal commitment for those projects.
DISCUSSION
Action Plan Development
When developing the draft Action Plan, staff analyzed the City’s ongoing programs eligible for CDBG and/or HOME funds, such as the Home Improvement Program and Tenant Based Rental Assistance (TBRA) and sought proposals from the community for programs and projects to be funded with available CDBG and HOME funds in the coming fiscal year. Funding requests for CDBG human services are considered on a competitive basis every two years with conditional funding awards made for a two-year term; capital project proposals are considered annually. Two RFP’s for FY 2022/23 were released in December 2021 and the City received two applications for CDBG funds, and two applications for the HOME TBRA Administrator.
Attachment 1
22-0292 Agenda Date: 4/20/2022
HUD Spending Limits for Public Services and Administration HUD regulations limit how much entitlement grantees can allocate for program administration and public (human) services activities. CDBG administration is limited to 20% and public services are limited to 15% of the CDBG grant and program income funds (no administrative funding is available from disencumbered funds or fund balance).
As shown in Table 1 below, staff estimates that no more than $268,867 in CDBG funds can be allocated for administrative and planning (including fair housing), and no more than $202,584 can be provided for public services, for the coming fiscal year. Since this is the second year of the two-year human service funding cycle, any funds in excess of year one funding allocations will be split evenly among each human service grantee. HOME regulations limit funding for administration to no more than 10% of the entitlement grant and 10% of program income received in prior years, if applicable.
The amount recommended to be allocated for HOME administration complies with this requirement.
Funding Availability
The City anticipates receiving a CDBG grant of $1,200,561 and a HOME grant of $415,138 for FY 2022/23, which is based off of grant allocations from the previous year. Should the City receive more CDBG funds than estimated, staff will allocate those funds to the CDGB Capital Project - Sunnyvale Community Services (SCS) Generator Program as that is the only application not fully funded for this fiscal year. In addition to the FY 2022/23 grants, staff estimates that approximately $150,000 in CDBG program income will be received by the end of the current fiscal year, not including amounts deposited into the Housing Rehabilitation Revolving Loan Fund (RLF). Program income consists of loan payments on prior CDBG loans, as well as interest accrued in the fund.
As shown in Table 1 below, about $1.9 million in CDBG funds and approximately $2.3 million in HOME funds will be available for new activities to be implemented next fiscal year. These amounts include FY 2022/23 entitlement grants, program income, and balances from prior years’ grants.
These totals may increase or decrease if different program income is received than the current projections.
Table 1: Funds Available in FY 2022/23
AVAILABLE FUNDS CDBG HOME
FY 2022-23 Entitlement Grants $ 1,200,561* $ 415,138*
CHDO Set-Aside (HOME) $ - $ 62,270*
Projected FY 2021-22 Program Income $ 150,000* $ 801,818* Projected Disencumbered/Fund Balance $ 623,469 $ 1,037,013 TOTAL $ 1,974,030* $ 2,316,239*
(Amounts followed by * are estimates)
Proposed CDBG Activities
The projects and programs proposed to be funded in 2022 are shown in Table 2 below and in Attachment 2. These activities are eligible for the indicated funding type and amount recommended, based on federal regulations associated with these grants, and meet one or more priority needs as identified in the City’s 2020-2025 Consolidated Plan.
Attachment 1
22-0292 Agenda Date: 4/20/2022
Administration and Planning:
Administration includes the City’s expenses for staffing and implementing the CDBG and HOME programs, including public outreach, holding hearings, publishing notices, developing the RFPs, evaluating proposals, grant contract management, tracking of grant funds and program income, sub- grantee monitoring, reporting, and compliance with federal requirements such as environmental, labor, anti-discrimination, and fair housing regulations. Indirect costs (overhead for expenses incurred by internal service departments) and fair housing services are also included in program administration.
Housing Rehabilitation (Owner-Occupied)
The Home Improvement Program provides grants and in-kind assistance to lower-income home owners, including mobile home owners, and for minor home improvements (e.g., energy efficiency upgrades, exterior painting, emergency repairs and disabled access improvements). The Home Access Grant is also available to lower-income renters, with the landlord’s consent. The recommended allocation for home improvement grants for next year is $100,000, which is an expansion of the program (typically funded at $50,000). The City is adding more funds to the program in an effort to serve more households by expanding a high demand service, which is roof replacement/repairs.
Capital Projects & Economic Development - WorkFirst Sunnyvale The “WorkFirst Sunnyvale” Program has been implemented for over ten years by Sunnyvale Community Services, in partnership with Downtown Streets Team. The program provides homeless and at-risk clients with job readiness training, job placement services, career counseling and supportive services. It helps clients obtain long-term employment and/or increase their earnings to obtain housing, stability, and increased self-sufficiency. The Program qualifies for CDBG funding as a Community-based Development Organization (CBDO) economic development activity. The current FY 2021/22 WorkFirst program was ended by HUD in January 2022 due to concerns regarding the data and outcome reporting, specific to permanent job placements during prior program years. The City is currently working with HUD to ensure full compliance of the WorkFirst program to allow the program to re-start at the new fiscal year.
Capital Projects & Economic Development - ADA Curb Ramps The Action Plan also includes a plan to enter into an interdepartmental agreement with the Public Works Department to construct up to 75 ADA compliant curb ramps throughout the City to enhance walkability and safety for all residents, especially residents with mobility issues.
Capital Projects & Economic Development - Sunnyvale Community Services Generator Additionally, the Action Plan includes funding a Generator Project at the new Sunnyvale Community Services headquarters. The generator will act as a back-up to the refrigerator/freezer system that supports the large-scale food distribution efforts at their facility. The funding will support covering the cost of installing the generator, which was already purchased by Sunnyvale Community Services (i.e., match commitment). As this is the only project not fully funded in this funding cycle, should the City receive a greater amount of CDBG funds, all excess funding will go towards this project, up to the maximum request of $150,000.
Public Services (Human Services)
CDBG funds may be used for various public services, as long as a majority of the clients are lower -
Attachment 1
22-0292 Agenda Date: 4/20/2022
income persons, and the services address the priority needs identified in the Consolidated Plan. FY 2022/23 is the second year of the two-year funding cycle so there is no competitive award process this year - and the agencies funded during the FY 2021/22 cycle are recommended to receive their second allocation of funding on July 1, 2022. Continued funding awards include services such as, but not limited to: assistance to seniors, disabled adults, homeless residents, lower-income households, and at-risk youth.
Revolving Loan Fund
A Revolving Loan Fund (RLF) is allowed within the CDBG program - and many CDBG grantees use revolving loan funds in conjunction with single family rehabilitation programs. The City has an RLF and, like many other CDBG grantees, utilizes it to issue housing rehabilitation grants and loans to lower-income mobile-and-single-family homeowners. The City generally sustains the Program by depositing Program Income into the RLF, but will also direct a portion of entitlement grant funds toward RLF projects, as previous year balances of the RLF are nearing depletion, and some balances of funds from previous years are available to reallocate to replenish program needs.
Proposed HOME Activities
Tenant Based Rental Assistance
The Action Plan includes a large investment, $2 million in HOME funds, in its Tenant Based Rental Assistance (TBRA) program, - which will double the capacity of the program (serves 40-households, up from 20-households) during the upcoming two program years. The TBRA program provides up to two years of rental assistance, coupled with supportive services, to low-income households in Sunnyvale. Sunnyvale’s TBRA Program has been in operation for seven (7) years, but due to limited HOME funds, the program has not been able to grow significantly. Due to a large increase in program income, and past years of unallocated funds, the City now has the ability to offer a substantially larger TBRA contract. In December 2021, the City released an RFP to recruit a TBRA Administrator and will issue a conditional funding award to Sunnyvale Community Services to take on this important role. The new TBRA contract will span two fiscal years, with the goal to focus future HOME funding on TBRA moving forward.
Table 2: Recommended Allocations in 2022 Action Plan
Category Activity CDBG HOME
Administration Planning and Administration, and
Fair Housing Services
$ 268,867 $ 119,781
Housing
Rehabilitation
Home Access Program $ 100,000 N/A
Rental Housing Tenant Based Rental Assistance N/A $ 2,000,000 Economic
Development
Workfirst Sunnyvale (CBDO) $ 517,993 N/A
Revolving Loan
Fund
Revolving Loan Fund Deposit $ 250,000 N/A
Public Services Human Services Grants $ 201,484 N/A
CHDO Community Housing Dev. N/A $ 62,270
Capital Projects Generator Installation $ 135,686 N/A
Capital Projects ADA Curb Ramps $ 500,000 N/A
Totals $ 1,974,030 $ 2,182,051
Approximate Amount Available $ 1,974,030 $ 2,253,969
Difference $ - $ 71,918
Attachment 1
22-0292 Agenda Date: 4/20/2022
Category Activity CDBG HOME
Administration Planning and Administration, and
Fair Housing Services
$ 268,867 $ 119,781
Housing
Rehabilitation
Home Access Program $ 100,000 N/A
Rental Housing Tenant Based Rental Assistance N/A $ 2,000,000 Economic
Development
Workfirst Sunnyvale (CBDO) $ 517,993 N/A
Revolving Loan
Fund
Revolving Loan Fund Deposit $ 250,000 N/A
Public Services Human Services Grants $ 201,484 N/A
CHDO Community Housing Dev. N/A $ 62,270
Capital Projects Generator Installation $ 135,686 N/A
Capital Projects ADA Curb Ramps $ 500,000 N/A
Totals $ 1,974,030 $ 2,182,051
Approximate Amount Available $ 1,974,030 $ 2,253,969
Difference $ - $ 71,918
FISCAL IMPACT
Approval of the Action Plan is necessary for the City to receive two federal grants (CDBG and HOME) next fiscal year. The recommended funding allocations in the Action Plan make use of these grant funds and related program income for various purposes consistent with the grant program regulations. Expenditure of these federal funds is necessary to meet timeliness requirements.
PUBLIC CONTACT
Public contact was made by posting the Housing and Human Services Commission’s agenda on the City’s official notice bulletin board and on the City’s website. Notice of public hearings, including the 30-day public comment and review period, was posted at City Hall and published in the Sunnyvale Sun newspaper on April 1, 2022. A draft of the 2022 Action Plan was made available for public review, upon request, at the One Stop Counter at City Hall, and on the City’s website for the required minimum 30-day review period prior to City Council action.
ALTERNATIVES
Recommend that the City Council:
1. Approve the 2022 Action Plan as shown in Attachment 2 of the staff report.
2. Approve the 2022 Action Plan as shown in Attachment 2 of the staff report with modifications.
RECOMMENDATION
Alternative 1: Recommend that the City Council approve the 2022 Action Plan as shown in Attachment 2 of the staff report.
Approval of the Action Plan will allow the City to receive the 2022 CDBG and HOME grants and use them to address local needs for affordable housing and related programs, consistent with the 2020- 2025 Consolidated Plan. The City Council will consider this item on May 3, 2022.
Prepared by: Leif Christiansen, Housing Programs Analyst Reviewed by: Jenny Carloni, Housing Officer
Reviewed by: Trudi Ryan, Director, Community Development Reviewed by: Teri Silva, Assistant City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Reserved for Report to Council
2. Draft 2022 Action Plan
3. Excerpt Draft Minutes of Housing and Human Services Commission Meeting of March 23, 2022
Attachment 1