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PRESENTATION AND CONSIDERATION OF ACCEPTANCE OF THE 2016/2017 CONSOLIDATED ANNUAL PERFORMANCE AND EVALUATION REPORT (CAPER) AND SOLICITATION OF INPUT ON FUNDING PRIORITIES FOR THE COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG), HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME), AND EMERGENCY SOLUTIONS GRANT (ESG) FOR THE 2018/2019 PROGRAM YEAR
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RECOMMENDED ACTION
Recommended Action
Council conduct the public hearing and accept the year-end report.
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SUMMARY
The City of Chula Vista is required to prepare a Consolidated Annual Performance and Evaluation Report (CAPER) for the City’s U.S. Department of Housing and Urban Development (HUD) grant programs, which include Community Development Block Grant (CDBG), HOME Investment Partnerships (HOME) and Emergency Solutions Grant (ESG). This report provides a summary of activities undertaken during the last fiscal year (2016/17) towards meeting the goals of the 2015-2019 Consolidated Plan. In addition, a public hearing is being held to solicit public input on funding priorities for the upcoming grant year (2018/2019).
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
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 an administrative function, and is not 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 activity qualifies for a Certification of Exemption.
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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 an administrative function, and is not 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 activity qualifies for a Certification of Exemption pursuant to Title 24, Part 58.34(a)(2)&(3) of the Code of Federal Regulations and pursuant to the U.S. Department of Housing & Urban Development Environmental Guidelines. Thus, no further environmental review is necessary.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
As the 74th largest city in the nation, Chula Vista receives three federal funds directly from HUD as an entitlement community: the Community Development Block Grant (CDBG), Home Investment Partnerships Act Program (HOME), and the Emergency Solutions Grant (ESG). Administered by the Development Services Department’s Housing Division, the funds are vital in helping the City meet its mission of strengthening and revitalizing our community through housing, social services, and infrastructure improvements. In order to qualify for these funds, HUD requires that the City prepare and submit three planning documents which provide information on the City’s use of the CDBG, HOME and ESG funds, including:
1) The Five-Year Consolidated Plan (Five-Year Plan), which documents the City’s housing and community development needs, identifies its strategies for meeting those needs during a five-year period. The City adopted the current Five-Year Plan (2015-2019) in May of 2015;
2) The Annual Action Plan (Annual Plan) details the upcoming year’s strategies to meet the goals identified in the Five-Year Plan. The City’s current Action Plan (2017/2018; the third year of the 5-Year Plan) was adopted in July of 2017; and
3) The Consolidated Annual Performance Evaluation Report (CAPER) outlines accomplishments and progress towards the goals articulated in the Action Plan. In accordance with the HUD requirements, the 2016/2017 CAPER was submitted to HUD on September 28, 2017 (90 days after the close of the fiscal year).
In summary, the City reported that during fiscal year 2016/2017, the Housing Division administered nearly $2.6 Million in combined federal grant funds. Despite the downturn in the economy and the elimination of the former 20 percent set aside of Redevelopment funds for low/moderate-income housing, the City utilized its federal funds and leveraged other funding sources to make targeted and strategic investments towards meeting the housing, services, and community development needs of its residents. The City accomplished many noteworthy achievements, including the following:
• Completed construction of Duetta, an 87-unit affordable housing project located in the Millenia master planned community, funded with HOME and low/moderate income housing funds.
• Provided rehabilitation loans to two (2) low-income homeowners to complete health and safety related improvements.
• Provided 11 households with financial assistance for the purchase of their first home. CalHome grant funds from the State of California were used to leverage the City’s HOME funds to maximize the amount of assistance available to the households.
• Provided 175 homeless, including victims of domestic violence and mentally ill clients, with access to transitional housing, temporary housing subsidies, and case management services through a short-term shelter, rapid re-housing, and tenant-based rental assistance (TBRA) program.
• Completed the Moss Street Sidewalk Improvement Project and the Holiday Estates Park Project, bringing infrastructure and park improvements to 14,540 residents within the surrounding area.
• Assisted approximately 4,500 low/moderate income residents with services ranging from food, health, housing, and referral services for youth, special-needs, elderly and homeless.
These and other accomplishments were achieved while adhering to the rules and regulations that govern the federal entitlement grant programs, including fair housing activities and monitoring:
• Expending funds in a timely manner;
• Funding only HUD-eligible projects;
• Maintaining its administration and public service expenditures within the mandated spending caps.
On November 20, 2017, the City received a letter from the City’s HUD Community Planning and Development Representative reviewing the City’s performance in administering its grant program. The letter highlighted the significant achievements made by the City and identified the City as a program high performer meeting and exceeding some of the goals of the programs. The City has no outstanding HUD findings and no Single Audit findings related to implementation of the HUD CPD programs.
Public Hearing-Solicitation of Input for the 2018/2019 Annual Process for HUD Grant Programs:
With programs complete for fiscal year 2016/17, and the current program year (2017/2018) underway, the City begins its planning process for fiscal year 2018/19. The City’s HUD approved 2015-2019 Consolidated Plan (ConPlan), effective July 1, 2015, identifies needs and establishes funding priorities and goals (Attachment 2). The Consolidated Plan guides the City in the development of its annual program. Established priorities and goals are as follows:
• Housing:
o Affordable rental housing for low and moderate-income households
o Maintenance and preservation of existing housing stock
o Homeownership opportunities
• Community Development Priorities:
o Infrastructure improvements in low and moderate-income neighborhoods
o Community enhancement
o Special needs and homeless priorities including public services, ADA improvements, and transitional and homeless housing and services
This public hearing represents the first opportunity to solicit public input on these identified low-income housing and community development needs and funding priorities for the upcoming fiscal year (2018/2019).
Resources:
While the City has not yet received final notification of its allocation, the City anticipates receiving the following for fiscal year 2018/2019:
• CDBG $1,996,844
• HOME $ 636,695
• ESG $ 172,909
Additionally, any prior-year unencumbered CDBG and HOME grant funds will be included for re-programming to other eligible activities. Final funding amounts will be presented to Council once the City is notified by HUD.
CDBG Program
The CDBG program represents the City’s largest grant entitlement, funding a variety of housing and community development activities to benefit the City’s lower income residents. Funding is generally available for public service activities, capital projects, housing activities, and debt service payment for an existing Section 108 loan.
Section 108 Loan:
For fiscal year 2017/2018, the City’s Section 108 debt service payment will be $763,125. After deducting this required debt service payment from the anticipated CDBG annual entitlement, an estimated $1,233,719 will remain for public services programs, community development, housing projects, and grant administration.
Public Services Category:
HUD limits the funding that can be utilized on public services activities to 15% of the annual entitlement amount (estimated to total $299,527 in fiscal year 2018/19). Annually, the majority of the funding requests the City receives are for public services. Requests typically exceed the available funds.
Consistent with the 2015-2019 ConPlan, additional rating criteria (the “tier” system) will be included in the review of the Public Services applications. Given the economic conditions over the last few years, Staff has seen a significant increase in the number of requests received and the total funding requested by both non-profit organizations and City Departments. CDBG funds are pursued to close funding gaps resulting from losses of funding at the Federal and State levels and in community giving. Several non-profit organizations and City Departments experienced complete cuts in state funding and/or experienced decreased levels of donations.
Given the limited financial resources available, the tier system focuses our limited resources on basic and essential daily living needs and on vulnerable populations where the impact of limited resources can be significant.
The funding methodology consists of a three-tier approach, classifying each of the activities in the following three categories for Public Services activities:
• Tier I: Basic/Essential Needs (Homeless Services, Food, Emergency Housing)
• Tier II: Special Needs Clientele who meet HUD’s Definition of Presumed Benefit (Services for Battered Spouses, Abused Children, Severely Disabled Adults, Abused Children)
• Tier III: Other (Transportation Services, Case Management, Preventative Health Care Services, Recreation (non-disabled, non-emergency services)
Historically, there has been sufficient funding for Tier I and Tier II programs. Any remaining Public Services funds were then distributed among Tier III programs.
Capital Improvement and Housing Related Activities:
An estimated $534,824 will be available for capital improvement and housing projects for 2018/2019. To be considered eligible for funding, a project must first meet a HUD National Objective (located in a low and moderate-income census tract), not be regional in nature, and be located in a service area that is primarily residential. Funding recommendations for Capital and Housing Related Activities are then prioritized based on the following criteria:
• Eligible projects that address priorities listed in the ConPlan (Attachment 2); and
• Effectiveness of activity by meeting the following:
o Leveraging of other funding sources;
o Number of clients to be served;
o Identification on the City of Chula Vista’s Critical Needs List.
Home Investment Partnerships Act (HOME)
An estimated $ 636,695 in HOME funds will be received by the City in fiscal year 2018/19. HOME funds may be used to provide affordable rental housing and home ownership opportunities through:
• New construction
• Acquisition
• Rehabilitation
• First time homebuyer assistance
• Tenant-based rental assistance
HOME regulations require cities to set aside a minimum of fifteen percent (15%) of their annual allocation to assist Community Housing Development Corporations (CHDOs) for the creation of affordable housing units. This would equate to approximately $90,000 of the 2018/19 funds. Should these funds not be utilized for this specific purpose, these funds would be recaptured by HUD.
Emergency Solutions Grant (ESG)
It is estimated that the City will receive $172,909 in ESG entitlement funds for fiscal year 2018/19 in ESG funds. These funds may be used to provide homeless services through:
• Homeless Prevention;
• Rapid Re-Housing (rental assistance);
• Street Outreach;
• Emergency Shelter; and
• Homeless Management Information Systems (HMIS).
Effective January 1, 2018, the City will require its current and future ESG Subrecipient(s) to participate in HUD’s Coordinated Entry System in accordance with the City’s and Continuum of Care’s written standards. This new rule will require each applicant of homeless services to go through an assessment process. This process provides priority to clients with the highest needs based on an establish vulnerability index. In addition, eligible clients will be assigned a Housing Navigator.
Next Steps
Funding applications for the three grant programs (CDBG, ESG and HOME) will be available to all interested organizations and City departments in January 2018, with applications due in February. Staff will release a Notice of Funding Availability that provides application criteria and provide an application workshop. All applications will be reviewed to determine eligibility and return to Council in March 2018 to present recommended allocations to eligible projects.
DECISION-MAKER CONFLICT
Staff has reviewed the decision 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 Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other 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. The activities funded through the federal grant programs are directed towards the revitalization of neighborhoods, economic development opportunities, and improved facilities and services. The nature of these activities is consistent with the Goals, Strategies and Initiatives in Goal 5: Connected Community.
Strategy 5.1: Encourage Residents to Engage in Civic Activities
Initiative 5.1.2 Fosters an Environment of Community Involvement
The City has developed a detailed Citizen Participation Plan (CPP) which requires the participation of the community. The CPP requires the City to provide citizens with reasonable and timely access to meetings, information, and records related to the grantee's proposed and actual use of funds. A minimum of two public hearings are held annually to obtain citizen participation at all stages of the Five-Year Consolidated Plan and Annual Action Plan. This includes the identification of priorities, review of proposed activities, and review of program performance.
Strategy 5.2: Provide Opportunities that Enrich the Community’s Quality of Life
Initiative 5.2.1 Provide Services and Programs Responsive to Residents Priorities
The CAPER (Attachment 1) includes the list of accomplishments using CDBG, HOME and ESG funding that provided decent affordable housing opportunities and a suitable living environment with adequate public facilities, infrastructure and services to City residents.
CURRENT YEAR FISCAL IMPACT
There is no current fiscal impact to the General Fund as the program is revenue offset by the grant funds.
ONGOING FISCAL IMPACT
There are no ongoing fiscal impacts as the program is revenue offset by the grant funds. Anticipated funding and expenditures for fiscal year 2018/19 are as follows:
ATTACHMENTS
Attachment 1: 2016/2017 Program Year Review Correspondence from HUD
Attachment 2: 2015-2020 Consolidated Plan Funding Priorities
Staff Contact: Angélica Davis, Sr. Management Analyst - DSD Housing Division