Report Prepared by: Kimberly Nutt, Housing Program Supervisor, Housing Division/Development Services Department)
Title
SUBJECT: Subrecipient Agreement Between the City of Merced and Habitat for Humanity Merced/Stanislaus Counties for the “A Brush With Kindness” Homeowner Occupied Rehabilitation Program Utilizing Program Year 2022 and 2023 U.S. Department of Housing and Urban Development Community Development Block Grant (CDBG) Funding
REPORT IN BRIEF
Considers approval of a new subrecipient agreement with Habitat for Humanity Merced/Stanislaus Counties to reinstate the previous homeowner occupied rehabilitation (OOR) program that expired on June 30, 2025, and through the new agreement, extend the previous OOR program an additional two years in order to provide appropriate time to complete rehabilitation projects already in progress and extend the expenditure deadlines of the previously allocated CDBG funding totaling $300,000.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving the Subrecipient Agreement Between the City of Merced and Habitat for Humanity, Merced/Stanislaus Counties for the Community Development Block Grant Single Unit Homeowner Occupied Rehabilitation “A Brush With Kindness” Program; and,
B. Authorizing the City Manager to execute all associated documents and agreements.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than recommended by staff (identify specific findings and/or conditions to be addressed in the motion); or,
3. Deny; or,
4. Refer to staff for reconsideration of specific items (specific items to be addressed in the motion); or,
5. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Section 200 of the City of Merced Charter, City of Merced 2022 and 2023 Annual Action Plans, and Title 24 of the U.S. Code of Federal Regulations, Part 570.
CITY COUNCIL PRIORITIES
The homeowner rehabilitation projects associated with the program align with the 2022/23, 2023/24, and current 2025/26 City Council priorities in support of affordable housing (which includes making homeownership affordable and safer for low-income residents).
DISCUSSION
The City of Merced Housing Division requests approval of a new five-year Subrecipient Agreement with Habitat for Humanity Merced/Stanislaus Counties to reinstate the previous “A Brush With Kindness” homeowner occupied rehabilitation program whose previous three-year program agreement inadvertently expired on June 30, 2025. The agreement expired with at least two viable projects in process and additional potential owner applicants needing home repair assistance.
Background
Habitat for Humanity International is a global network of volunteer-based housing partners founded in 1979 and originally centered around the concept of “partnership housing” and a “Fund for Humanity.” Locally, Habitat for Humanity Merced/Stanislaus oversees housing projects in both Merced County and Stanislaus County, and the City of Merced Housing Division has partnered with them to accomplish homeowner occupied rehabilitation projects since approximately 2017.
On November 17, 2023, the City executed a three-year long Subrecipient Agreement with the local Habitat chapter to provide vital homeowner occupied rehabilitation (OOR) services to qualifying low- to moderate-income homeowners who live in their homes within the Merced city limit boundaries.
A total of $300,000 of Community Development Block Grant Funding was allocated to the program with the 2022 and 2023 Annual Action Plans, along with corresponding amounts to cover Housing Division activity delivery costs (ADC). No additional funding was allocated to the program with the 2024 annual plan. As already stated, this agreement unintentionally lapsed on June 30, 2025.
Discussion - New Agreement
The new five-year agreement is backdated to July 1, 2022, to allow reimbursement of any eligible non-physical pre-agreement administrative costs that Habitat may have incurred from the start of the previous term of performance. HUD allows reimbursement of these costs when appropriate and deemed eligible.
At the time the original agreement was executed, Habitat was experiencing unexpected capacity issues due to the January 2023 flooding in Planada. When the flooding occurred, Habitat for Humanity became key coordinators and contractors dedicated to helping Planada and Merced residents and business owners recover from flood damages, leaving little to no capacity to simultaneously carry out the City’s OOR program. During this period, the Housing Division was also experiencing unexpected staff shortages, resulting in some bottlenecking and prioritization of workload items at the time.
With the Planada flood recovery activities wrapped up and new Housing staff trained and up to speed, there are at least two rehabilitation projects that staff has been working to prepare environmental certifications for and are ready to move forward. Housing staff has also received inquiries from a small number of additional homeowners needing repairs to their homes; as such, the program is still in high demand.
With the $300,000 combined funding originally allocated from program years 2022 and 2023, up to six homeowners’ homes can be repaired. No new funding will be provided to the new agreement. Extending the original program by two years will allow the existing appropriated funds to be spent on projects in the pipeline.
With renewed dedication to the project by both parties, all appropriated funding is expected to be expended by its final expiration date on June 30, 2027. New CDBG and/or HOME Investment Partnerships Program (HOME) funding could be allocated to a brand new homeowner rehab activity with the 2027 Annual Action Plan that Spring, if warranted.
IMPACT ON CITY RESOURCES
Funding previously provided to the subject program was approved by City Council on July 5, 2022, and June 5, 2023, in association with the respective 2022 and 2023 Annual Action Plans.
No impact to City financial and staff resources is expected. No additional funding is planned for this program.
ATTACHMENTS
1. Previous Subrecipient Agreement - PY2022-2024 “A Brush With Kindness”
2. Draft Subrecipient Agreement - PY2022-2026 “A Brush With Kindness”