Report Prepared by: Kimberly Nutt, Housing Program Supervisor, Housing Division/Development Services Department
Title
SUBJECT: Final (Second) Public Hearing for Receipt of Additional Public Comment and Approval of the U.S. Department of Housing and Urban Development (HUD) 2022 Annual Action Plan
REPORT IN BRIEF
Re-open and hold the Second Public Hearing that was continued from May 16 and June 21, 2022, to receive final public comment regarding the Draft 2022 Annual Action Plan; Discuss and provide any direction to staff regarding any final changes to funding activities or other items; Commitment of funding to proposed subrecipient projects; Approval of the 2022 Annual Action Plan; and, authorizing the City Manager to execute all documents necessary to submit the finalized plan to HUD and to accept the Community Development Block Grant (CDBG) and Home Investment Partnership (HOME) grants after approval by HUD.
RECOMMENDATION
City Council -
A. Re-open and conduct the Public Hearing to receive any final public input regarding the Draft 2022 Annual Action Plan; and,
B. Discuss and provide direction to staff regarding any requested final changes to the Annual Plan text and Subrecipient and other proposed projects;
And, Adopt a Motion:
C. Committing HUD funding to the proposed subrecipient projects, as listed in the Administrative Report, contingent upon HUD’s final approval and provided all National Objectives and other related HUD requirements, including environmental clearances, are met for each project; and,
D. Adopting Resolution 2022-41, A Resolution of the City Council of the City of Merced, California, Approving the 2022 HUD Annual Action Plan, certifying compliance with the requirements of the Community Development Block Grant (CDBG) Program and Home Investment Partnership (HOME) Program, and authorizing Staff to submit all approved documents and certifications to the U.S. Department of Housing and Urban Development; and,
E. Authorizing the City Manager or designee to execute all related documents, allow staff to make any modifications as necessary to submit the Final Draft of the 2022 Annual Action Plan, and to accept the CDBG and HOME grants after approval by HUD.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, as revised by the City Council; or,
3. Deny the request; or,
4. Refer back to staff for reconsideration of specific items (specific items to be addressed in City Council motion); or,
5. Continue to a future City Council meeting (date and time to be specified in City Council motion).
AUTHORITY
The U.S. Department of Housing and Urban Development (HUD), per Title 24 of the Code of Federal Regulations (CFR) 91.105, requires that participating jurisdictions involve citizens in the development of each Five-Year Consolidated Plan, Annual Action Plan, and Consolidated Annual Performance and Evaluation Report (CAPER), including any substantial amendments to the plans; the Charter of the City of Merced, Section 405, 409, and 411 et seq. of the City of Merced; and, pursuant to 24 CFR Subpart F, the City is required to submit the Annual Action Plan to HUD for approval to receive 2022 Program Year grant funds.
CITY COUNCIL PRIORITIES
As provided for in the 2022-23 Adopted Budget; and both 2021-22 and 2022-23 Council Priorities under Housing and Homelessness.
DISCUSSION
After re-opening the Public Hearing continued from the May 16 and June 21, 2022, meetings and accepting final public comment, staff requests that Council conduct a final review and approve the Draft 2022 Annual Action Plan (Attachment 1) at this meeting.
Additionally, staff is requesting any final recommendations and/or changes from Council regarding the project funding, which will be allocated to the requesting subrecipients with the motion to approve the overall plan. Any requested final Council changes will be incorporated into the final approved draft to be submitted to HUD by the extended submittal deadline of July 13, 2022.
Following submittal, HUD may require City staff to edit elements of the plan in order to meet specific HUD requirements and regulations that will enable acceptance and approval of the plan. As such, staff requests permission, through the City Manager’s authority, to complete these changes to Council’s approved final draft.
Pursuant to 24 CFR 91.500(a), HUD advises that the City should submit its Annual Action Plan at least 45 days before the start of the program year (July 1st, annually), or by May 15th of each year. However, this year, as Council and the Public was advised at the May 16, 2022, meeting and Public Hearing, HUD’s announcement of formula-calculated 2022 allocation amounts was late this year, and thus, HUD adjusted the City’s “45 day” submittal deadline to 60 days from the date the allocation announcement was made, which was May 13, 2022. As such, this necessitated continuing the May 16, 2022, Public Hearing to June 21, 2022, and then to July 5, 2022, to give staff sufficient time to re-adjust all the estimated figures posted in the Public Review draft to actual dollar figures and further update other sections of the plan as needed.
Eligible Activities Using CDBG and HOME Funds - Quick Review
Expenditure of CDBG and HOME funds is entirely regulated by HUD and the City, by accepting HUD’s allocation of those funds, is required to follow those laws. CDBG is regulated under Title 24 of the Code of Federal Regulations (CFR) Part 570, and HOME by 24 CFR Part 92.
CDBG can only be spent on certain eligible activities under the general categories of Acquisition/Disposition, Public Facilities and Improvements, Public Services, and Housing - but not construction of new housing. In addition, CDBG activities must meet at least one of the three HUD National Objectives, being: 1) activities benefitting low- and moderate-income persons; 2) activities which aid in the prevention or elimination of slum or blight; and, 3) activities designed to meet community development needs having a particular urgency (such as during a national or locally declared emergency). At least 70% of all CDBG funds must be directed to benefitting low- to moderate-income persons and households, and a maximum of 15% of the combined sum of the yearly CDBG allocation plus program income can be - but is not required to be - directed to activities HUD considers public services. Therefore, the City is limited to this sum as to how much we can fund to local organizations for public service funding. Administration costs are strictly limited to 20% of the year’s allocation, and housing-related projects such as acquisition of property with associated rehabilitation activities is not a public service and is not subject to the 15% cap. Finally, the City is required to spend all or most of its CDBG allocation each year and have no more than 1.5% of funds remaining by May 1st of each year (“timeliness deadline”) or HUD may penalize with a smaller allocation of funding in ensuing years.
HOME funds, unlike CDBG, can be directed specifically to construction of new rental housing units, and all HOME funds must benefit low- to moderate-income persons. Administrative costs is limited to 10% of the HOME allocation, and HUD requires HOME grantees to set aside a minimum of 15% towards activities to be carried out by a Community Housing Development Organization (CHDO), which can also be directed to construction of rental housing units. Other eligible uses of HOME funds include homeowner rehabilitation, homebuyer activities (acquisition, new construction, or rehabilitation), and tenant-based rental assistance (TBRA) activities.
Recommended 2022 Project Funding - Public Services, Housing, Infrastructure, and Administrative Projects
Initial proposed project funding was introduced at the April 4, 2022, Public Hearing (Attachment 2), where staff presented the full list of funding requests received, an initial overview of project type, nature and National Objective of the program, and staff’s recommendations regarding funding. At the April meeting, staff had not received notification from HUD as to how much the 2022 CDBG and HOME allocations would be, but days earlier had just been notified by HUD that the announcement of allocations would be severely delayed.
Since the April 4th Public Hearing, two things have occurred that have affected some of the project funding amounts: 1) withdrawal by the Merced Rescue Mission of its $400,000 CDBG housing acquisition/rehab funding request due highly competitive housing market conditions (resulting in a shift of funding); and, 2) receipt of actual allocation figures from HUD on May 13, 2022 (CDBG was lower and HOME was higher than estimated).
The below are the final lists of recommended subrecipient program funding amounts and other project funding. Each meets a basic HUD-eligible activity, one of the three HUD National Objectives, and addresses a priority community need as reported in the City’s adopted 2020-2024 Five Year Consolidation Plan (ConPlan).
• Project Funding: Public Services - CDBG (15% cap = $196,416):
|
Organization |
Project Description |
Amount Requested |
Funding / Final Total |
|
Sierra Saving Grace |
Short-term rental/mortgage/utility (gas & electric) assistance |
$ 30,000 |
$ 30,000 |
|
Alliance for Community Transformations |
Housing navigation services and deposit assistance for shelter residents |
$ 42,616 |
$ 42,616 |
|
Harvest Time |
Food Distribution service - operation cost assistance |
$ 54,442 |
$ 54,442 |
|
Boys and Girls Club of Merced County |
Youth Enrichment - literacy, character, life, career/college skills development for high school-aged youth; incl. cost of transportation |
$ 55,730 |
$ 55,730 |
|
Total Public Service: |
$ 182,788 |
• Project Funding: Housing-Related Projects - CDBG, HOME, and 15% HOME-CHDO
|
Organization |
Project Description |
Source |
Amount Requested |
Funding / Final Total |
|
Habitat for Humanity, Stanislaus |
Owner Occupied Rehabilitation |
CDBG |
$ 150,000 |
$ 150,000 |
|
Sierra Saving Grace |
Multi-family rental unit acquisition with rehab |
CDBG |
$ 1,586,200 |
$ 1,568,065 |
|
Fuller Center for Housing of Merced County |
Development fee assistance for single family home construction (HSA Affordable Housing Sites) |
HOME |
$ 45,000 |
$ 45,000 |
|
T.B.D. |
New construction - affordable rental housing project(s) |
HOME |
n/a |
$ 3,151,115 |
|
Central Valley Coalition for Affordable Housing |
New construction or rental unit rehab project(s) - can be combined with above HOME project |
HOME CHDO |
n/a |
$ 90,479 |
|
Total Housing-Related Projects: |
$ 5,004,659 |
• Project Funding: Parks & Infrastructure Projects - CDBG
|
Project |
Scope of Work |
Location |
Funding / Final Total |
|
Parks ADA Improvements |
Install ADA improvements from right-of-way to play equipment to improve access |
Frederick Douglas Park |
$ 80,000 |
|
|
|
Benjamin Tanager Park |
|
|
|
|
Love Veasley Fam Park |
|
|
|
|
Little Angels Park |
|
|
|
|
12th and G Park |
|
|
Crosswalk / ADA Improvements |
Addition of crosswalks across W. Childs to existing 2021 project |
Southeast corner of S. Canal Street and W. Childs Avenue |
$ 293,190 |
|
Total Parks & Infrastructure: |
$ 373,190 |
• Project Funding: Administrative Costs - CDBG (20%), HOME (10%), and Activity Delivery
|
Organization |
Project Type |
Source |
Funding / Final Total |
|
Self-Help Enterprises |
Administration of first year of CalHome 2021 First Time Homebuyer & Owner Occupied Rehab programs |
CDBG Admin |
$ 12,000 |
|
Merced County Human Services Agency |
Continuum of Care Collaborative Applicant admin funding |
CDBG Admin |
$ 38,000 |
|
Project Sentinel Inc |
Fair Housing Services |
HOME Admin |
$ 30,000 |
|
City of Merced Housing Division |
Direct and Indirect Administrative Costs |
CDBG & HOME Admin |
$ 218,301 |
|
City of Merced Housing Division |
Activity Delivery Costs (ADC) from all applicable projects |
CDBG & HOME ADC from projects |
$ 919,247 |
|
Total Administrative Projects: |
$ 1,217,548 |
2022 HUD Allocations and Total Funds Available
The CDBG allocation of funding for Fiscal Year 2022-23 is $1,099,911, plus $90,000 of program income (PI) and $1,593,043 in prior-year resources. The FY 2022 HOME allocation is $603,192, with an estimated $66,000 in program income during the year and $3,428,039 in prior-year resources. Combined, the total of HUD FY 2022 program allocations and other revenue is $6,880,186. The Housing Division does not receive any revenue from the General Fund.
Citizen Participation
Three Community Needs Input and Community Organization Information Meetings were held in January of 2022, concurrent with the Community Needs Assessment survey that was pushed via website, social media (Facebook and Instagram), radio spots on KYOS, and utility bill inserts. Two of the three Community Input meetings were held hybrid in-person and via Microsoft Teams links.
An extended 45-day public review and comment period (including an additional 15 days added by Council at the meeting of May 16, 2022) was held from April 16 through May 31, 2022, and Housing staff received no written, in-person, or other comments during the comment period. The draft plan was posted for public viewing on the Housing Division website (www.cityofmerced.org/housing) and viewing locations and comment submission methods were published in the Merced Sun-Star and Merced County Times newspapers on March 17, 2022, with the Public Hearing Notice that noticed the April 4, 2022, and May 16, 2022, public hearing dates, as well as on the Housing webpage.
Citizen participation in this process is crucial to a complete and thorough plan. Community needs input workshops and informational meetings, announcements of project funding availability, online community needs assessment surveys, town hall meetings, public hearings, and even social media comments on the City’s Instagram and Facebook pages provide citizens the opportunity to participate in and give input to the community’s needs and this plan as it is being developed. These plans are essentially guided by the needs and the priorities expressed by residents and community stakeholders who participated in the process.
The 2022 Annual Action Plan implements the third year of the 2020-2024 Consolidated Plan that was approved by Council on November 30, 2020, and by HUD on March 10, 2021. Housing staff continues to work diligently to implement programs that were allocated 2020 and 2021 funding, but that were delayed in receiving it due to the tumultuous last two years of the COVID-19 pandemic. The 2022 plan includes a description of how this year’s funding will be used to address identified objectives for housing, homelessness, and economic development, and describes the vast accomplishments of the last year regarding affordable housing policy and funding awards, including $28.4 million in State Homekey awards and $2.5 million of 2021 CalHome funding.
IMPACT ON CITY RESOURCES
No budget appropriation action is required at this time. The Housing Division expects that it will not need any funding from General Fund as a supplement for the 2022-23 Fiscal Year, as all administrative costs are covered by the CDBG and HOME admin allowances and activity delivery costs.
ATTACHMENTS
1. Final Draft 2022 Annual Action Plan
2. Admin Report - April 4, 2022
3. Admin Report - May 16, 2022
4. Admin Report - June 21, 2021
5. Draft Resolution