Report Prepared by: Kimberly Nutt, Housing Program Supervisor, Housing Division/Development Services Department
Title
SUBJECT: Approval of Allocation of U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant Program Resources and Approval of Associated Subrecipient Agreements with Alliance for Community Transformations, and Harvest Time for the Respective Programs Approved with the Adopted 2020 and 2021 Annual Action Plans
REPORT IN BRIEF
Considers authorizing the execution of Community Development Block Grant (CDBG) Subrecipient Agreements with Alliance for Community Transformations ($44,280) and Harvest Time ($56,412).
RECOMMENDATION
City Council - Adopt a Motion:
A. Approving an agreement for programs identified in the 2020 and 2021 HUD Annual Action Plans using Fiscal Year 2020-21 and 2021-22 CDBG funds with Alliance for Community Transformations in the amount of $44,280 for the “Achieving Housing and Economic Stability with Survivors of Violence” Program (Account 018-1301-552-29.00/Supplies and Services); and,
B. Approving an agreement for a program identified in the 2021 HUD Annual Action Plan using Fiscal Year 2021-22 CDBG funds with Harvest Time in the amount of $56,412 for the “Food 4 You” Program (Account 018-1301-552-29.00/Supplies and Services); and,
C. Authorizing the City Manager or the Deputy City Manager to execute, and if necessary, direct staff to make minor modifications to the agreements described above and as attached, and all associated documents and exhibits; and,
D. Authorizing the Finance Officer to make necessary budget adjustments.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than recommended by staff; or,
3. Deny; or,
4. Refer to City 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 2020 and 2021 HUD Annual Action Plans, and Title 24 of the U.S. Code of Federal Regulations, Part 570 (the HUD regulations concerning CDBG, including Subpart K of these regulations).
CITY COUNCIL PRIORITIES
As approved by City Council on November 16, 2020, and July 6, 2021, and budgeted with Fiscal Year 2020-21 and 2021-22 Program Funds. The projects associated with the agreements being presented for approval align with 2021-22 Council Goals and Priorities, in support of Housing and Homelessness programs that create affordable housing and prevent homelessness.
DISCUSSION
Staff is requesting that Council authorize execution of two subrecipient agreements for use of CDBG funding approved with the 2020 and 2021 HUD Annual Action Plans. HUD approved the projects in their respective Annual Action Plans on March 10, 2021, and October 27, 2021. Each program and agreement is explained further below.
Following execution of each agreement, the organizations can then begin submitting invoices for payment of eligible costs.
As required, Housing staff has completed all National Environmental Protection Act (NEPA) environmental reviews necessary to allow Federal funds to be spent on each of the projects. Both subrecipients are federally recognized Section 501(c)(3) Non-Profit Organizations, as well as Public Charities under Section 170(b)(1)(A)(vi) of the Internal Revenue Service Code.
Alliance for Community Transformations (ACT)
The implementation of this program originally approved in the 2020 (“First Year”) Annual Action Plan for rental housing deposits and job attainment cost assistance was severely affected by the delays related to the Coronavirus Pandemic and re-start of community outreach efforts that spring and summer leading up to Council’s approval of the Plan on November 21, 2020. On the HUD side, the delay was further exacerbated by HUD’s late approval of the Annual Plan on March 10, 2021, as HUD themselves was also experiencing Pandemic-related delays. Due to these cumulative reasons, the Alliance for Community Transformations was not able to start their program, not to mention finish it, before the typical program year end date of June 30 that year. The 2020 funding became “carryover” funds in the 2021 Annual Action Plan as Housing staff worked to catch up.
In Spring of 2021, Alliance for Community Transformations (ACT) applied for 2021 CDBG funding for a new program with similar and overlapping activities (life skills classes and rental housing deposits), and Council awarded funding for this new program on July 6, 2021, with HUD approving the 2021 Annual Plan on October 27, 2021.
Due to the similar activities of both Annual Plan programs proposed by ACT, Housing staff has prepared one agreement that includes all proposed activities and funding from both the 2020 and 2021 Annual Plans and, through the extended performance period noted in the agreement, will be giving ACT more time to complete the activities into the 2022-2023 program year. It should be noted that HUD has granted entitlement cities like the City of Merced leniency for the normal CDBG “timeliness” deadlines for the 2021 Program Year; thus, funding does not need to be expended prior to May 1st as is typically required. ACT has articulated that they will be able to implement and complete all activities before the extended period of performance.
Harvest Time
Harvest Time had previously been awarded 2020 CDBG funding to replace the aging, 25+-year-old freezer and refrigerator units that are vital to their community food distribution program, and an associated agreement was executed on July 1, 2021 (like the ACT program, cumulative delays also affected implementation of Harvest Time’s program). Harvest Time began working with the contractor that had provided the original quote for purchase and installation of the new units and was preparing to submit the required building permit; however, the quote, originally prepared in October 2019, could no longer be honored due to the length of time elapsed and a substantial increase in the cost of materials. This resulted in the original 2020 CDBG grant not being able to cover the complete cost of the replacement.
Harvest Time had also applied for 2021 CDBG funding for eligible general program costs, as well as funds to expand the storage area inside their warehouse. However, due to the increase in the cost of the freezer/refrigerator units, the 2021 funds originally planned to be used towards the storage expansion will now be redirected towards completing the vital installation of the units as “Phase II” of the replacement activity. Without the units replaced, Harvest Time cannot continue to provide food to the community members they serve.
Normally, the Housing Division’s subrecipient agreements only allow payment of grant funding by reimbursement method - that is, reimbursement of eligible costs already incurred and paid for by the subrecipient. However, Title 24 of the U.S. Code of Federal Regulations Section 200.305 (24 CFR 200.305, “Federal Payment”) allows Grantees like the City of Merced (as the “pass through entity”) to allow advance payments as an alternative method if it can be determined that the subrecipient does not have the working capital for the initial expenditure under the reimbursement method. Harvest Time has provided sufficient documentation showing insufficient working capital; thus, advance payments for the unit replacement will be allowed through the agreement, with certain stipulations and timelines as required by HUD. Other eligible costs, such as staffing, will still be required to follow the standard reimbursement method, as Harvest Time has enough working capital for those initial outlays.
IMPACT ON CITY RESOURCES
Both agreements do not require any expenditures from the General Fund. These are both subgrants allocated in the current year budget (Fiscal Year 2021-22) and funds are available within Account 018-1301-552.29.00 (Supplies and Services).
ATTACHMENTS
1. Draft Agreement with Alliance for Community Transformations
2. Draft Agreement with Harvest Time