Report Prepared by: Erica Stafford, Housing Program Specialist, with Kimberly Nutt, Housing Program Supervisor, Housing Division/Development Services Department
Title
SUBJECT: Approval of a Supplemental Appropriation in the Amount of $19,065 from Fund 1020 Affordable Housing and Approval of Professional Services Agreement with RSG Solutions in the Amount of $94,065 to Include Preparation of the 2025-2029 Five-Year Consolidated Plan, 2025 First-Year Annual Action Plan, Analysis of Impediments to Fair Housing Choice, and Updates to the Citizen Participation Plan; and, to Assist the Housing Division with Comprehensive Updates to its Federal Program Policies and Procedures
REPORT IN BRIEF
Considers approving a Professional Services Agreement with RSG Solutions in the amount of $94,065 to prepare the 2025-2029 Five-Year Consolidated Plan, 2025 First-Year Annual Action Plan, Analysis of Impediments to Fair Housing Choice, and updates to the Citizen Participation Plan, and to assist the Housing Division with necessary comprehensive updates to its Federal Program Policies and Procedures, as required by the U.S. Department of Housing and Urban Development (HUD), to ensure overall compliance with management of the City’s CDBG, HOME, and other Federal funding; Considers the use of $75,000 of 2024 Community Development Block Grant (CDBG) Administrative Funds and $19,065 from Fund 1020-Affordable Housing for the cost of these services.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Professional Services Agreement with RSG Solutions for preparation of the 2025-2029 Five-Year Consolidated Plan, 2025 First Year Annual Action Plan, Analysis of Impediments to Fair Housing Choice, and updates to the Housing Division Federal Policies and Procedures in the amount of $94,065; and,
B. Approving a Supplemental Appropriation from the unreserved, unencumbered fund balance of Fund 1020 Affordable Housing in the amount of $19,065 to offset the additional cost proposal to assist the Housing Division with updates to its Federal Policies and Procedures; and,
C. Authorizing the City Manager to execute, and if necessary, make minor modifications to the agreement and all associated documents.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions as specified by the City Council; or,
3. Deny the request; or,
4. Refer back to staff for reconsideration of specific items as requested by the Council; or,
5. Defer action to a future meeting (date and time to be specific in the motion).
AUTHORITY
Title 24 of the Code of Federal Regulations Section 91, requiring participating local government jurisdictions to prepare a consolidated document stating its goals for community planning, housing, and development programs over a five year period; and, the Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
Work encompassed in the proposed Professional Services Agreement will consider and involve most of the Council’s established 2024-2025 goals and priorities.
DISCUSSION
As an entitlement city under HUD’s Community Development Block Grant (CDBG) Program, and as a participating jurisdiction under the HOME Investment Partnership (HOME) Program, the City of Merced is required to submit a Five-year Consolidated Plan, together with a first-year Annual Action Plan, and Analysis of Impediments to Fair Housing Choice (AI) report.
The Consolidated Plan assesses and strategizes the housing and services needs of the community and is designed to meet the public input and community planning and development requirements that are necessary to receive funding that is allocated and available to the city as an entitlement community through HUD.
The Analysis of Impediments to Fair Housing Choice is a comprehensive review also required by HUD to identify and examine the barriers that may be preventing people from having equal access to housing choices based upon protected characteristics like race, color, religion, sex, national origin, disability, and familial status, then proposes strategies to address them.
The five-year Consolidated Plan, first-year Annual Action Plan, and AI report must be submitted to HUD no later than May 15, 2025, in order to be considered as an “on-time” submission. Public input is required both before the plan is written and after a draft has been produced to include citizen and community agency ideas and comments. The Plans also require consultation with other agencies such as the Merced County Housing Authority, Merced Community Action Agency, and Merced City/County Continuum of Care, among others, to ensure that there is appropriate interaction and communication between entities responsible for delivering complementary services and programs.
For better understanding, Attachment 4 provides a helpful introduction and overview to HUD’s consolidated planning process.
Additionally, over the last five years, the Housing Division has undergone multiple routine compliance monitoring’s by HUD, who has strongly advised that the City’s current policies and procedures document be updated in a comprehensive way, to include multiple procedure checklists covering several areas of compliance and types of activities, including subrecipient funding, management, and monitoring, affordable housing developments, environmental reviews, financial management and internal controls, and public infrastructure projects and related federal labor law compliance.
The amount of time, analysis, research, and expertise necessary to coordinate and put together and update these documents warrants the need for a qualified consultant to assist Housing staff. After sending out a Request for Proposal (RFP) in early-August 2024 and a one-week extension to allow for additional responses, staff received one response.
About RSG Solutions
RSG has a forty-year history serving vulnerable populations through their community development consulting practice. RSG has experience working with over 100 cities and counties each year, to build and implement strategies around housing, economic development, real estate, and fiscal health. RSG has been a key partner with the City of Merced, assisting with various housing programs and projects such as Housing Successor Agency, Property Disposition, and conducted a Pro-Housing Feasibility study.
RSG Solutions is experienced and knowledgeable in this process and the reports needing to be produced. Staff is confident in the quality and competence of the services being offered, as well as their ability to meet HUD’s submittal deadline.
For detailed information about the Scope of Work and the preliminary timeline for completion, please see RSG’s proposal at Attachment 2.
Fund 1020 Affordable Housing - Supplemental Appropriation
RSG Solutions has agreed to assist with and prepare the necessary documents according to the Cost Proposal included at Attachment 1, at a total cost of $94,065. The proposal includes the separate line-item cost of $19,065 to assist the Housing Division with its policies and procedures updates. This separate scope of work activity supplements the original Con Plan/Annual Plan/AI preparation activities that were budgeted for and approved by City Council in the 2024 Annual Action Plan, where $75,000 of the Housing Division’s CDBG administrative funding was set aside for a consultant.
Housing is requesting approval from Council to appropriate $19,065 from Fund 1020 Affordable Housing Fund, so that the Housing Division can retain its remaining administrative funding for staffing and overhead. The Division’s administrative budget may also be examined during the next mid-year budget review, to ensure that the remaining CDBG funding will be sufficient through the remaining fiscal year.
The Fund 1020 Affordable Housing Fund was approved and established by the City Council on June 20th, 2023. The purpose of this fund is to support the development of affordable housing within the City of Merced. While flexible, the Affordable Housing Fund policy allows use of funds under only certain purposes.
The Consolidated Plan serves as a strategic plan spanning the years of 2025-2029 which will guide Housing Division in the decision-making process to plan for, fund, and create different types of affordable housing in the City of Merced, which could be in the forms of rental and ownership housing projects, which could potentially include rehabilitation and land acquisition activities.
Additionally, updated policies and procedures will help ensure that most, if not all, of the activities listed involving rental housing, environmental reviews, ownership and owner-occupied housing, housing services, and other Fund 1020 eligible activities, if funded through HUD, are compliant with all procedures and relevant regulations of the provided funding.
As such, staff recommends that the use of Fund 1020 be approved to supplement the CDBG funds already budgeted for this consultant.
IMPACT ON CITY RESOURCES
The agreement for $94,065 will be funded by the following sources:
• $75,000 - Fund 2501-CDBG. This amount was specifically considered in the 2024 Annual Action Plan and funding is available in the Fiscal Year 2024-25 Adopted Budget.
• $19,065 - Fund 1020 Affordable Housing Fund requires a supplemental appropriation.
Recommendation B. will require 5 affirmative votes.
HUD notified the City of its CDBG and HOME allocations for Fiscal Year 2024-25 in May 2024, and the budget outlined in the approved 2024 Annual Action Plan is based upon those expected allocation amounts.
ATTACHMENTS
1. Cost Proposal by RSG Solutions
2. Proposal of Services from RSG Solutions
3. Fund 1020 / Affordable Housing Fund Policy
4. HUD’s Consolidated Planning Process: An Overview
5. Agreement with RSG Solutions