City of SunnyvaleAgenda Item23-0639 Agenda Date:6/28/2023REPORT TO HOUSING AND HUMAN SERVICES COMMISSIONSUBJECTConsider Approval of Draft Fourth Substantial Amendment to the 2019 Housing and UrbanDevelopment (HUD) Action Plan to Allocate Remaining CDBG-CV Funds for Administrative Activitiesand Contract ManagementBACKGROUNDCDBG and HOME ProgramsThe Community Development Block Grant (CDBG) program was established by the Housing andCommunity Development Act of 1974, Public Law 93-383, and the Home Investment Partnerships(HOME) program was established by the National Affordable Housing Act of 1990. These programsprovide annual grants to jurisdictions to enable them to “develop viable urban communities byproviding decent housing, a suitable living environment, and expanding economic opportunities,principally for low and moderate-income persons.” CDBG regulations define “low income” ashouseholds earning not more than 80% of area median household income, or what the City and theState of California refer to as “lower-income households.” The CDBG and HOME lower-income limitsare established annually by the U.S. Department of Housing and Urban Development (HUD) and arecurrently set at $131,750 for a household of four in the Sunnyvale-San Jose metropolitan area, withadjustments for larger or smaller households. To be eligible for most types of CDBG or HOMEassistance, the household’s gross annual income cannot exceed that amount.The City must submit an Action Plan to HUD every year in order to receive federal entitlement grantsfrom the CDBG and HOME programs. HUD is the federal agency that administers and regulatesthese grants and the Action Plan sets forth the proposed uses of the CDBG and HOME fundsprojected to be available each fiscal year. These funds may be used for eligible communitydevelopment activities to meet the priority and/or unmet needs, primarily of lower-income residents,described in the City’s HUD Consolidated Plan. In addition to the annual entitlement grant, the Citymay receive Program Income (PI) annually or an influx of funding specifically intended to respond toa public health and safety emergency.CDBG CARES Act FundingOn March 27, 2020, the federal government signed the Coronavirus Aid, Relief and EconomicSecurity Act (CARES Act) due to the COVID-19 pandemic. The CARES Act provides up to $5 billionin CDBG supplemental funding. Of that amount, $2 billion are being distributed to states andentitlement jurisdictions using the same statutory formula used to distribute the annual CDBGallocations.The City received a total of $1,711,165 from HUD in CDBG CARES (“CDBG-CV”) funds through theCARES Act. The CARES Act funds are designed to provide emergency assistance and healthcareresponse for individuals, families and businesses affected by the 2020 Coronavirus pandemic. AllPage 1 of 4 Attachment 1 Page 1 of 4
23-0639 Agenda Date:6/28/2023CDBG-CV funds are accounted for in the 2019 Annual Action Plan, which was substantially amendedon June 9, 2020 (RTC No. 20-0526), and March 30, 2021 (RTC No. 21-0381), to add in the newfunds.Since the beginning of the 2020 Coronavirus pandemic, the City has drawn down about $1.5 millionin CDBG-CV funds, which is about 87% of the total allocated funds.EXISTING POLICY:2015-2020 HUD Consolidated Plan:Goal A: Assist in the creation, improvement, and preservation of affordable housing.Goal B: Alleviation of Homelessness.Goal C: Provide essential human services, particularly for special needs populations.Goal D: Expanding Economic Opportunities.ENVIRONMENTAL REVIEWThe action being considered does not constitute a “project” per the California Environmental QualityAct (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that doesnot involve any commitment to any specific project which may result in a potential significant impacton the environment. The action is also exempt under the National Environmental Policy Act (“NEPA”)pursuant to 24 C.F.R. part 58.34(a)(1) and (3) as it relates to the development of plans and strategiesand is an administrative and managerial activity. Although site-specific projects may be identified inthe Action Plan, approval of the Plan does not constitute a formal commitment for those projects.DISCUSSIONSubstantial Amendment to the 2019 Action PlanThe process for a Substantial Amendment requires the same level of public outreach andengagement as the original Action Plan. A summary of the substantial amendment modifications isprovided in Attachment 2.A local jurisdiction receiving federal funds through the CDBG and HOME programs must, inaccordance with their Citizen Participation Plan, make a Substantial Amendment to their annualAction Plan if certain criteria are met. The City made the first substantial amendment to the 2019Action Plan in December 2019 (RTC No. 19-0991) to assist Sunnyvale Community Services inacquiring a new, larger facility to administer their services to the Sunnyvale community. The funds toprocess the first substantial amendment to the 2019 Action Plan were acquired through the receipt of$930,000 in Program Income. The second and third substantial amendments to the 2019 Action Planfocused on programming the $1,711,165 in CDBG-CV funds, by funding programs for householdsimpacted by the COVID-19 pandemic such as:
Attachment 1 Page 2 of 4
23-0639 Agenda Date:6/28/2023
Funding ModificationsThe City is proposing to reallocate $146,934 in unspent CDBG-CV funds for administrative activities.The City allocated an initial $104,399 (about 6% of total CDBG-CV funds) to cover the staff costsassociated with administering the approximately $1.7 million the City received in CDBG-CV funds.This initial allocation was not sufficient to cover costs associated with program management,technical support, and monitoring and close-out activities. The amendment (Attachment 3) willincrease the total amount of CDBG-CV funds allocated to administrative activities and contractmanagement to $251,333 (approximately 15% of total CDBG-CV funds), which allows the City tofinalize these programs while still keeping administrative costs under the administrative cap of 20%.Proposed CDBG-CV Budget RevisionThe budget revision compelling the Fourth Substantial Amendment to the FY 2019/20 Action Plan isshown in Table 1 below.
Since the City is proposing to increase funding of an approved activity by more than 30%, the City isrequired to process a substantial amendment per its Citizen Participation Plan criteria. If thesubstantial amendment is approved, the City will have a balance of about $69,000 in CDBG-CVfunds to program in future RFPs as guided by HUD.FISCAL IMPACTThis action has no impact on the General Fund. Approval of the Fourth Substantial Amendment to theFY 2019/20 Action Plan is necessary to effectively monitor and close-out CDBG-CV activities in aneffort to prepare for future HUD monitoring of these funds.PUBLIC CONTACTPublic contact was made by posting the Housing and Human Services Commission’s agenda on theCity’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 CityHall and published in theSunnyvale Sun newspaper on June 23, 2023. A draft of the FourthSubstantial Amendment to the 2019 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-dayreview period prior to City Council action.ALTERNATIVESPage 3 of 4 Attachment 1 Page 3 of 4
23-0639 Agenda Date:6/28/2023Recommend to City Council:1. Approve the Fourth Substantial Amendment to the 2019/20 Action Plan as shown inAttachment 3 of the staff report.2. Approve the Fourth Substantial Amendment to the 2019/20 Action Plan as shown inAttachment 3 of the staff report, with modifications.3. Do not approve the Fourth Substantial Amendment to the 2019/20 Action Plan.RECOMMENDATIONRecommend to City Council Alternative 1: Approve the Fourth Substantial Amendment to the 2019/20Action Plan as shown in Attachment 3 of the staff report.Approval of the Action Plan will allow the City to effectively monitor and close-out CDBG-CV activitieswith sufficient administrative funding in an effort to best prepare for future HUD monitoring of thesefunds.Prepared by: Leif Christiansen, Housing Programs AnalystReviewed by: Jenny Carloni, Housing OfficerReviewed by: Shaunn Mendrin, Planning Officer for Trudi Ryan, Community Development DirectorReviewed by: Teri Silva, Assistant City ManagerApproved by: Kent Steffens, City ManagerATTACHMENTS1. Reserved for Report to Council2. Draft Summary of the Substantial Amendment to the 2019 Action Plan3. Draft Substantial Amendment to the 2019 Action Plan
Attachment 1 Page 4 of 4