Report Prepared by: Kimberly Nutt, Housing Program Supervisor/Housing Division, and Scott McBride, Development Services Director/Development Services Department
Title
SUBJECT: Adoption of a Resolution Authorizing the Submittal of a Grant Application Under the 2021 State of California Housing and Community Development (HCD) CalHome Program for First Time Home Buyer Mortgage Assistance, Accessory Dwelling Unit/Junior Accessory Dwelling Unit Assistance, and Owner-Occupied Rehabilitation Assistance; and Approving a Subrecipient Agreement with Self-Help Enterprises to Administer and Implement the Grant Activities if Awarded
REPORT IN BRIEF
Authorizes the submittal of a Grant Application to the State of California Department of Housing and Community Development Department (HCD) under the 2021 CalHome Program in the amount of $2,500,000 to support First Time Home Buyer Mortgage Assistance, Accessory Dwelling Units - Junior accessory Dwelling Units (ADU/JADU) Assistance, and Owner-Occupied Rehabilitation Assistance; and Approves a Subrecipient Agreement with Self-Help Enterprises
RECOMMENDATION
City Council - Adopt a motion:
A. Adopting Resolution 2021-107, a Resolution of the City Council of the City of Merced, California, hereby authorizes the submittal of an application to the California State Department of Housing and Community Development for funding under the CalHome Program; the execution of a standard agreement if selected for such funding and any amendments thereto; and any related documents necessary to participate in the CalHome program; and,
B. Authorizing the City Manager or Deputy City Manager to execute the Standard Agreement and other necessary documents associated with the grant application and award process, including any subsequent amendments or modifications thereto, necessary to implement the CalHome Program activities; and,
C. Approving a Subrecipient Agreement between the City of Merced and Self-Help Enterprises to administer and implement the 2021 CalHome Program activities on behalf of the City of Merced and authorizing the City Manager or Deputy City Manager to execute the Subrecipient Agreement.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, with modifications; or,
3. Deny the request completely; or,
4. Refer to staff for reconsideration of specific items as requested by Council; or,
5. Continue to a future City Council meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
Fiscal Year 2021/22 Adopted Goals and Priorities, 4. Housing and Homelessness
DISCUSSION
The State of California HCD has issued a NOFA for funding under the CalHome Program. A copy of the NOFA is attached. This funding program is highly competitive. The City has received awards in 2006 and 2012 but did not receive awards under the past two applications (2019 and 2020). Program scoring ranks those jurisdictions which have more recent grant related experience higher in the standings. As more time passes in implementing this program the scoring decreases. Scoring also looks at capacity of the applying jurisdiction.
Self-Help Enterprises recently reached out to many jurisdictions in the Central Valley regarding grant application assistance for the CalHome Program. Self-Help submitted a response to our Open Housing Partner RFQ and is attached. Self-Help is a highly recognized housing nonprofit operating in the Central Valley. They have over 50 years of experience. They have partnered with many jurisdictions on CalHome grant applications, but also provide other services related to Housing and Community Development. By utilizing a Subrecipient Agreement, it fully authorizes Self-Help to administer and implement the grant activities on behalf of the City. This type of arrangement draws on their experience and potentially allows for higher scoring in the grant program. If awarded, they would administer the grant and perform all grant related implementation activities, effectively extending the City’s capacity to provide these much-needed services.
In reviewing stated community needs and expressed priorities, Self-Help and City Staff are recommending that the CalHome Grant application be prepared for the following activities and amounts:
• First-Time Homebuyer Mortgage Assistance - $1,000,000
• Owner-Occupied Rehabilitation - including mobile homes - $1,250,000
• Accessory Dwelling Unit - Junior Accessor Dwelling Unit (ADU/JADU) assistance - $250,000
Total grant application - $2,500,000.
The CalHome Program includes the following requirements:
• First-Time Homebuyer Mortgage Assistance - a maximum of up to $100,000 or 40% of the purchase price, whichever is less, can be provided to First-Time Homebuyers as a Homebuyer Assistance loan.
• Owner-Occupied Rehabilitation - a maximum of up to $125,000 can be loaned per house for owner-occupied rehabs. A major rehab currently averages over $100,000. In cases of major Rehabilitation, the City may need to combine CalHome funds with HOME or CDBG to fully fund the project. Minor rehab work, such as a new roof or other minor repairs to homes can be fully funded with CalHome. This activity can also assist mobile homes - manufactured homes, whether located in a mobile home park or elsewhere.
• Accessory Dwelling Unit - Junior Accessor Dwelling Unit (ADU/JADU) assistance - not to exceed $100,000, in the form of a loan.
Eligible activities predominantly benefit low-and-moderate-income qualified individuals and families. Self-Help will fully administer the program including all income verification requirements.
The application deadline is November 22, 2021. Notice of award is generally provided several months afterwards. Grant Agreements are generally provided a year after the application deadline, allowing for grant activities to be initiated and funded.
IMPACT ON CITY RESOURCES
The Subrecipient Agreement with Self-Help Enterprises provides for the costs to administer the grant. The grant would be carried out over a three-year period and the overall or direct cost to the City is $36,000. This covers costs for grant reporting, invoicing, preparation of draw requests, preparation of borrower summaries, and income verification - qualification. This cost is above the direct grant activity delivery fees which provides separate funding in implement all activities. Examples include preparation of rehabilitation budgets, condition surveys, preparation of loan documents, and similar activities. These delivery fees are passed through the grant implementation process. Execution of the Subrecipient agreement is necessary to demonstrate that Self-Help will perform the work on behalf of the City, allowing their experience to better leverage the opportunity to receive funding.
Funding for the administration of the grant is an eligible expense under the City’s Housing and Urban Development (HUD) Allocation under the Community Development Block Grant Program (CDBG). Given the delay between the time the grant application is submitted, when contracts are prepared, and when activities are implemented, it is recommended that funding be included in the 2022-23, 2023-24, and 2024-25 HUD Annual Allocation Plan, $12,000 per year.
If the grant is not awarded, the City is under no obligation to pay for any services under the Subrecipient Agreement. If the grant is awarded, a separate City Council action will be requested to receive the award and make the necessary budget adjustments. Depending on timing of the HUD annual allocation and the sources of the administrative funding, the City Council may be requested to utilize “pooled cash” as an intermediary funding source.
ATTACHMENTS
1. Resolution
2. Subrecipient Agreement Between City of Merced and Self-Help Enterprises
3. CalHome Notice of Funding Availability (NOFA)
4. Self-Help Housing Partner RFQ Response