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RESOLUTION NO. 2017-106 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING (1) THE FISCAL YEAR 2014/2015 AND 2015/2016 AMENDMENTS TO THE HUD ANNUAL ACTION PLANS TO PROGRAM $698,898 OF HOME INVESTMENT PARTNERSHIP ACT FUNDS; (2) APPROPRIATING HOME INVESTMENT PARTNERSHIP ACT FUNDS IN THE AMOUNT OF $698,898 TO TWO ELIGIBLE PROJECTS; (3) AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE AGREEMENTS FOR THE MANAGEMENT AND IMPLEMENTATION OF ELIGIBLE PROJECTS WITH EACH SUB-RECIPIENT/CONTRACTOR; AND, (4) AUTHORIZING THE CITY MANAGER TO EXECUTE ANY AND ALL RELATED DOCUMENTS NECESSARY TO OBTAIN THE HUD FUNDS (4/5 VOTE REQUIRED)
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
Annually, the City of Chula Vista (City) receives U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnership Act funding and must meet HUD’s timeliness requirements for the expenditures of these funds. A review of the City’s timelines indicates that the City is required to commit $300,000 to a HOME eligible project by July 31, 2017, with a minimum of 15 percent of the 2014-2015 and 2015-2016 HOME entitlement funds to eligible Community Housing Development Organizations. Staff has prepared an amendment (Attachment 1) to the 2014/2015 and 2015/2016 Action Plans to allocate these funds to two eligible projects, a HOME funded Tenant Based Rental Assistance Program and funding to support a Community Housing Development Organization to acquire and rehabilitate a qualified property in Chula Vista.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
CEQA: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act (CEQA) State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
NEPA:
Under the National Environmental Policy Act (NEPA), the activity is exempt per Title 24, Part 58.34(a)(2)(3) of the Code of Federal Regulations and pursuant to the U.S. Department of Housing and Urban Development Environmental Guidelines; therefore, pursuant to NEPA no further environmental review.
Although environmental review is not necessary at this time, once a Community Housing Development Organization selects a project(s) and a scope has been defined, environmental review will be required and a CEQA/NEPA determination completed prior to initiation of any related project activity.
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Environmental Determination
The Development Services Director has reviewed the proposed activities for compliance with the California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA). The proposed activities are not considered "Projects" as defined under Section 15378(b)(5) of the State CEQA Guidelines because the proposals consist of a reporting action, is not for a site specific project(s) and will not result in a direct or indirect physical change in the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, these activities are not subject to CEQA.
Under NEPA, the Tenant Based Rental Assistance Program qualifies for a Categorical Exclusion not subject to §58.5 pursuant to Title 24, Part 58.35(b)(1) of the Code of Federal Regulations and pursuant to the U.S Department of Housing and Urban Development. Thus, no further environmental review is necessary at this time for TBRA.
The acquisition and rehabilitation of a qualified property by a Community Housing Development Organization Project will require additional environmental review once a project site has been selected.
BOARD/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
The City of Chula Vista (City) receives, as a Participating Jurisdiction (PJ), on an annual basis, U.S. Department of Housing and Urban Development (HUD) HOME Investment Partnership Act funding to create affordable housing opportunities for low-income households. HOME funds can be used for a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people.
Each year, the City releases a Notice of Funding Availability (NOFA) that allows Subrecipients, Developers, and Community Housing Development Organizations to submit applications for eligible HOME projects. While a project was received for the NOFA released in 2017, the applicant was not able to come to agreement for the acquisition of the property and therefore, will not move forward with the project.
In compliance with the requirements governing HOME funding, the City is required to commit $300,000 to a HOME eligible project(s) by July 31, 2017 and a minimum of 15 percent of its 2014-2015 and 2015-2016 HOME entitlement funds to eligible Community Housing Development Organizations (CHDOs). Previously, the City was able to meet its CHDO requirement as an aggregate through its financial assistance over the years to projects sponsored by South Bay Community Services and did successfully receive HUD approval to reduce the City’s CHDO set aside requirement.
On December 2, 2016, HUD published an interim final rule making changes to the HOME program commitment, CHDO reservation, and expenditure requirements. The rule became effective on January 3, 2017. Beginning with FY 2015 HOME allocations, HUD will no longer allow the cumulative method for measuring compliance with the requirement that PJs commit HOME funds, including its CHDO reservation, within 24 months. HUD will measure the PJ’s compliance with the 24-month commitment deadline on an annual grant basis. The rule also eliminates the 5-year expenditure and CHDO set-aside expenditure deadlines and replaces it with an expenditure deadline based on the expiration date of the grant.
In accordance with the definition of “commitment” at 24 CFR § 92.2, the City must execute an agreement with the subrecipient for an eligible project to demonstrate commitment. Any HOME funds not committed or disbursed by the respective deadlines will be recaptured by U.S. Treasury.
In order to proceed with meeting the commitment requirements, City staff is recommending an amendment to the 2014/2015 and 2015/2016 Annual Action Plans (Attachment 1) to program $698,898 of HOME funding for ready to implement programs/projects. Home funds can be used for the following activities:
§ New construction
§ Acquisition
§ Rehabilitation
§ First time homebuyer assistance
§ Tenant-based rental assistance
CHDO funds must be used solely for acquisition and rehabilitation projects and cannot be used to fund a stand-alone First Time Homebuyer or Tenant Based Rental Assistance activities. The goal for a CHDO is to develop housing for low income households in the form of affordable rental housing or developing a parcel to be sold to low income buyers.
The projects to be funded include the following:
Tenant Based Rental Assistance Program (TBRA) $300,000
TBRA provides an initial 12 months of rental assistance funds to qualified clients who can meet mutually agreed upon goals to become self-sufficient. Clients will be required to access mainstream resources and have access to a case manager who will assist them to develop a self-sufficiency plan, to navigate the program to successfully use their voucher, and meet as needed. Clients will pay no more than 30% of their income towards rent with assistance capped at the HUD published Fair Market Rate limits. Each client will be encouraged to select housing that is affordable for the long term and a unit size that matches their household per the program guidelines. Those clients who successfully meet the goals of the program may be eligible for a one-time extension based upon the availability of program funds.
Staff will publish a Request for Proposals to select and contract with a third party agent (the “TBRA Program Administrator”) who has experience and expertise to operate the program and provide the necessary case management services in support of clients. It is anticipated that funding is sufficient to assist up to 15 clients
Target groups for the TBRA are the following:
§ Displaced Households: Including households that are displaced from their primary residence as a result of City or Housing Authority action (code enforcement, expiring covenants, and other city actions that are no fault of the tenant). This requires a referral from the Chula Vista Housing Division.
§ Special Needs Households:
o Including those who are homeless. These clients may need to participate in case management services from the County or another provider.
o At risk of becoming homeless. This criteria is similar to Homeless Prevention assistance using the HUD’s criteria “but for not this assistance, the household would be homeless.”
TBRA Program Administrator will work closely with local homeless service providers when identifying clients. Service providers include the City’s Homeless Outreach Team, the Chula Vista Community Collaborative, South Bay Community Services, and the County of San Diego PERT clinician and other providers identified by the Administrator.
Community Housing Development Organizations (CHDO) $398,898
A portion of HOME program funds must be reserved for specific activities to be undertaken by a special type of non-profit called a Community Housing Development Organization (CHDO). These funds are specifically targeting eligible projects to be completed by a CHDO. A qualified CHDO is a private non-profit, community-based service organization that has internal staff with demonstrated capacity to develop affordable housing for the community it serves.
The City must commit a minimum of 15 percent of the 2014-2015 and 2015-2016 funds to an eligible organization prior to July 31, 2017. In order to meet this requirement, $398,898 is available to eligible CHDOs who can commit these funds by the commitment deadline. City staff will release a Notice of Funding Availability to select a CHDO.
Staff recommends that the City Council approve the appropriate amendments to the City’s 2014/2015 2015/2016 HUD Annual Action Plans programming $698,898 of HOME Investment Partnership Act funds for the above referenced projects and appropriating these funds accordingly. These actions will allow the City to meet its timeliness requirements in order to avoid the recapture of HUD funding and provides the authority to enter into a Subrecipient Agreement (Attachment 2) and a CHDO Agreement (Attachment 3) by July 31, 2017.
DECISION-MAKER CONFLICT
Staff had reviewed the decision maker conflict contemplated by this action and has determined that it is not site specific and consequently, the 500-foot rule found in California Code of Regulations section 18704.2(a)(1), is not applicable to this decision. Staff is not independently aware, and had not been informed by any Councilmember, of any fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. This item supports the City’s Strategic Plan as it seeks to enhance the City’s Strategic Goal of Health Community by providing a safe living environment to residents currently living in unable to obtain and maintain stable housing and also meets the City’s Strategic Goal of Connected Community as it provides necessary services that may support the elderly, disabled, and/or the homeless.
CURRENT YEAR FISCAL IMPACT
This action will utilize up to $698,898 in HOME funds for Fiscal Year 2016/2017. Any options to extend the agreement for subsequent years may be funded through the annual budget process based on the availability of HOME funds.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact to the City’s 2016-2017 General Fund as project and staff costs are covered by the grants.
ATTACHMENTS
1. Annual Action Plan Amendment
2. HOME Agreement
3. CHDO Agreement
Staff Contact: Jose Dorado, Senior Management Analyst, DSD Housing Division