May 10, 2005
SUBJECT: Consider Approval of FY2005-06 Action Plan: Recommendations for Funding of Community Development Block Grant (CDBG) and HOME Funds
REPORT IN BRIEF
Each year the City of Sunnyvale must submit an Action Plan to the U.S. Department of Housing and Urban Development (HUD) in order to receive its entitled funds under the Community Development Block Grant Program (CDBG) and the HOME Program. This report submits to the City Council for its approval the proposed FY2005-06 Action Plan, the first year of funding of goals and priorities described in the 2005-2010 Consolidated Plan.
The Action Plan allocates $2,847,531 of CDBG funds including ($400,000 of anticipated CDBG program income, $700,000 of earned income held in a revolving loan fund, and $328,714 of disencumbered funds) and $747,978 of HOME funds, in accordance with the Consolidated Plan presented for consideration by Council in RTC-05-134 this evening. These funds are proposed to fund the following activities: outside group service agencies, a capital project to replace refrigeration equipment at a Senior Nutrition site, program administration including funding of an update to the Housing and Revitalization Sub-Element and an update to the Analysis of Impediments to Fair Housing Choices, fair housing services, rehabilitation of single and multi-family homes, the home access program, housing acquisition, neighborhood improvements, sewer infrastructure including manhole rehabilitation and public facilities/ADA sidewalks.
The Action Plan allocates $350,000 of CDBG funds to support outside groups service agencies. The Housing and Human Services Commission has recommended the distribution of these funds to 17 agencies. Staff concurs in the recommendation of the Commission for the distribution of CDBG funds to these agencies. The Commission has also made recommendation to the City Manager for allocation of $100,000 of General Funds to outside groups. The City Manager will consider this recommendation in the preparation of the 2005-2006 General Fund budget.
BACKGROUND
CDBG and HOME Funds
On November 28, 1990 President Bush signed the Cranston/Gonzales National Affordable Housing Act of 1990, which reaffirmed the national commitment to provide decent, safe, and sanitary housing for all Americans.
In 1995, HUD adopted a new regulation requiring that the applications for funds be consolidated into a single submission, incorporating in the application aspects of CDBG, HOME, Emergency Shelter Grant (ESG), and Housing Opportunities for Persons with AIDS (HOPWA). Only the CDBG and HOME programs are applicable in Sunnyvale. This new plan is known as the Consolidated Plan. The Consolidated Plan includes an Action Plan and certifications that must be updated and submitted on an annual basis, while the complete Consolidated Plan must be submitted at least every five years. Sunnyvale will be submitting its third Consolidated Plan for the years 2005-2010. The FY2005-06 Action Plan is the first year of implementation of the newly approved Consolidated Plan.
Outside Group Funding
The City of Sunnyvale recognizes the need for human services and provides or supports services as deemed necessary in the community.
Human service agencies in the City receive funding from the federal Community Development Block Grant program (CDBG) with additional funding provided by the General Fund. The amount of funding received by outside groups for human services from the federal CDBG grant is limited by federal regulation. The amount of CDBG funds used for these services must not exceed 15% of the City’s total CDBG grant allocation plus 15% of program income received during the prior fiscal year. The staff calculation of program income is cautiously conservation as early repayments of loans are difficult to predict with any certainty.
In 1999 Council approved a two-year review process with annual public hearings for funding of these outside groups. This modification began with the funding process for FY2000-01. At that time a revised version of Council Policy related to human services was approved as Human Services Policy 5.1.3. (Attachment A)
The Human Services Policy describes the roles of staff, the Housing and Human Services Commission and the Council in the implementation of this policy. It also describes the process through which outside groups can be funded; the methodology by which programs/services can be assessed; and an evaluation system that assures equity in the process of funding considerations by Council.
FY2005-06 begins a two-year funding cycle. At the beginning of each two-year cycle, the City solicits applications from non-profit organizations serving Sunnyvale residents. When applications are received, staff determines eligibility of each agency’s proposal based on guidelines provided in the Human Services Policy and prepares a technical evaluation of the applications for the Housing and Human Services Commission. Through periodic reporting requirements and a technical annual on-site audit and assessment report, staff monitors the operation of each previously funded group, as well as its progress in meeting contracted service levels to Sunnyvale residents. Staff’s evaluation of the performance of outside groups is generally on a per-unit or per-client basis for service to Sunnyvale residents. Staff’s evaluation of each application is based upon the evaluation factors contained in the Human Services Policy and a year-end program assessment of each outside group currently providing services.
During the initial year of the two-year funding cycle, the Housing and Human Services Commission undertakes a review of the applications, and provides the opportunity for each group to present its program to the Commission for evaluation. In order to determine their recommendation, the Commission uses evaluation criteria appropriate to their areas of concern, and applies these criteria uniformly to all applications reviewed. The Commission’s recommendations are then provided to the Council together with a staff recommendation.
During the second year of funding, the City will not solicit applications; rather, funding to agencies that have met or exceeded performance standards and have met ongoing administration and fiscal management requirements will be continued during the second year. Funding awards will be recalculated by staff based on percentage decrease or increase of funds available through both funding resources; adjustments to both awards and service level expectations will be made. Inflation factor increases will not be added to the second year funding award.
Agencies that have not met their performance standards will have an opportunity to present their case for continued funding to the Housing and Human Services Commission, which will review the staff evaluation of those groups’ performance. The Commission will provide the opportunity for each group to present issues related to unmet performance goals for their consideration. The Commission may recommend reduced funding for these under-performing agencies; their recommendations will be provided to the Council, together with a staff recommendation.
There are a number of non-profit service agencies that currently provide a wide variety of services that benefit Sunnyvale residents. Services range from the emergency and financial assistance provided by Sunnyvale Community Services, to the family and youth counseling services provided by the Bill Wilson Marriage and Counseling Center. Other social services provided to Sunnyvale residents include: rape crisis counseling; support services for battered women; nutritional programs for seniors; emergency housing services; legal counseling for the poor and the elderly; and services for the disabled. All of these services help residents who may have no other place to turn to for assistance. The services are also a part of the network of social support that helps to maintain the quality of life in the community by helping those who need assistance.
Included in this report as Attachment D is a notebook that includes: all of the Outside Groups funding applications received during this funding cycle, the year-end program assessment for the FY2003-04, and the proposal evaluation prepared by staff.
EXISTING POLICY
Housing and Community Revitalization Sub-element:
Goal 2.3C: Promote and maintain a diversity in tenure, type, size, location and cost of housing to permit a range of individual choice for all current residents and those expected to become city residents as a result of normal growth processes and employment opportunities.
Policy 2.3C.1.: Attempt to maintain as many as possible of the existing rental units affordable to lower income families and seniors.
Policy 2.3C.1d.: The City should encourage and assist non-profit housing organizations to develop 100 new low and very low income rental units within the City over the next five years.
Council Policy 5.1.3 Human Services Policy, updated in October 1999. The Human Services Policy recognizes the need for Human Services and provides or supports services as deemed necessary in the community. These include but are not limited to the emergency services, senior services, disabled services, youth services and advocacy services.
DISCUSSION
The City will have a total appropriation of $2,847,531 in CDBG funds for FY2005-06. This represents $1,418,817 in new grant funds, approximately $400,000 in anticipated program income to be received from repayment of housing rehabilitation loans, $700,000 of current revolving loan fund (loan repayment reserves), and $328,714 of reallocated FY2004-05 CDBG grant funds.
The CDBG revolving loan fund (RLF) manages program income receipts and disburses rehabilitation and acquisition loans to CDBG eligible projects. The FY2004-05 RLF reserve is projected at approximately $1.28 million, of which $700,000 is appropriated in FY2005-06 as outlined in this Action Plan. In addition, the RLF expects to receive $600,000 Housing Loan Repayments in FY2005-06, of which $400,000 is appropriated for FY2005-06.
The City will have a total of $747, 978 in HOME funds for FY2005-06, which is to be used primarily to expand the supply of low-income rental housing. HOME funds will be used for acquisition and new construction by non-profit housing development organizations.
TABLE I
CDBG Funding Available
FY2005-06
|
CDBG Funding Allocation FY05/06
|
$ 1, 418,817 |
|
Anticipated Program Income
|
$ 400,000 |
|
Revolving Loan Fund Reserves |
$ 700,000 |
|
Reallocated Funds (04/05) |
$ 328,714 |
|
Total CDBG Budget
|
$ 2,847,531
|
|
CDBG 20%CAP (1)
(Maximum Avail for Administration)
|
$ 363,763 |
|
CDBG 15% CAP (2)
(Maximum Avail. for Outside Group Funding)
|
$ 350,000
|
(1) The maximum administrative funding is calculated by multiplying the funding allocation and the anticipated program income by 20%.
(2) The maximum Outside Group Funding (Public Services) is calculated by multiplying the funding allocation and the prior year’s program income by 15%.
TABLE II
HOME Funding Available
FY2005-06
|
HOME Funding Allocation FY05-06 |
$ 747,978 |
|
Anticipated Program Income |
$ 0 |
|
Total HOME Budget |
$ 747,978 |
|
HOME 10% CAP
(Maximum Avail for Administration) |
$ 74,798 |
The proposed Action Plan is included as Attachment B. The Action Plan provides a listing of all the activities to be undertaken during the program year. These include rehabilitation of single and multi-family homes, housing improvement programs (home access, emergency repairs and paint programs), sidewalk improvements for ADA accessibility, sewer infrastructure improvements, housing and neighborhood improvement activities described in the Community Development Strategy, and the support facilities and services that are provided by outside groups receiving CDBG funds.
Community Development Block Grant Funding Recommendation
|
TABLE III
CDBG FUNDING RECOMMENDATIONS FY2005-06 |
|
FY 2004-05 Budget |
|
Proposed
FY 2005-06 Budget |
|
PROGRAM ADMINISTRATION |
$377,522 |
|
$ 343,948 |
|
|
$315,522 |
|
$294,148 |
|
Fair Housing Services |
30,000 |
|
$ 30,000 |
|
|
0 |
|
$ 7,800 |
|
|
0 |
|
$ 12,000 |
|
|
15,000 |
|
0 |
|
|
17,000 |
|
0 |
|
REHABILITATION |
$791,476 |
|
$ 864,951 |
|
|
711,476 |
|
$784,951 |
|
|
80,000 |
|
$ 80,000 |
|
ACQUISITION |
$344,809 |
|
$ 526,651 |
|
|
344,809 |
|
$526,651 |
|
NEIGHBORHOOD IMPROVEMENTS |
$79,000 |
|
$ 79,000 |
|
|
79,000 |
|
$ 79,000 |
|
Capitol Projects |
$150,000 |
|
$ 682,980 |
|
|
100,000 |
|
$150,000 |
|
|
0 |
|
$526,980 |
|
|
0 |
|
$ 6,000 |
|
|
50,000 |
|
0 |
|
PUBLIC SERVICES* (See Table IV)
|
$283,193
|
|
$ 350,000
|
|
TOTAL CDBG BUDGET |
$2,026,000 |
|
$2,847,531 |
|
|
|
|
|
Program Administration:
Administration costs include all the costs and activities allowed by regulation to be reimbursed to the City for incurred eligible expenditures for the planning and administration of a Community Development Block Grant. This is budgeted at $343,948, well under the 20% administrative maximum established by HUD ($363,763). The activities included under program administration are fair housing services, a portion of the costs associated with the preparation of the update to the Housing and Revitalization Sub-Element, a required update of the Analysis of Impediments to Fair Housing Choice and the operating costs for the overall program administration.
Fair Housing Services
Staff and the Housing and Human Services Commission recommends that Project Sentinel continue to receive $30,000 to provide contractual services for Fair Housing during the first year of a two-year funding cycle. Project Sentinel is an established fair housing agency, with offices in Sunnyvale and Palo Alto, and provides fair housing and landlord/tenant dispute resolution services for numerous cities in the County. Staff is continuing to recommend Project Sentinel because the agency has a strong record in effective community outreach, provides educational materials in nine languages, has a dedicated system that provides them with the capacity to handle phone calls in numerous languages and maintains a well developed web site. Project Sentinel’s costs are based on the assumption that all three cities (Sunnyvale, Mountain View and Palo Alto) will continue contracting with the same agency. This has allowed additional actions to be undertaken this past year due to the benefit of cost efficiencies realized from a regional service.
Rehabilitation:
Housing staff administers and implements several home improvement programs that include the Substantial and Minor Rehabilitation Programs, the Paint Program and the Home Access Program. Substantial rehabilitation loans and project supervision are available on a citywide basis with construction loans up to $60,000 per household, and mobile home loans up to $15,000 per coach. The goals for completed units during FY2005-06 are 15 single-family/mobile home projects. The Paint Program for exterior painting provides loans of up to $4,000 to senior owners of single-family homes and grants of $1,000 to eligible non-senior homeowners for reimbursement of painting materials. The Home Access Program provides grants to handicapped households throughout the community. Services include retrofit of units occupied by disabled persons including the installation and maintenance of lifts and ramps, when needed. Budgeted funds include the operating costs associated with direct implementation of these projects and 60% of the rental rates charged to the Housing Division. The goals for completed units during FY2005-06 are 50 Home Access and Paint Program projects during the program year.
Acquisition:
Housing staff administers the Housing Acquisition and Preservation of at Risk Housing Program. The administration includes assessing the viability of proposed projects, analyzing pro-formas, negotiating terms, managing escrows, preparing loan documents and preparing staff reports to Council for consideration of funding to non-profit housing developers. Projects that are “at risk” of conversion to market rate, and projects that increase the current supply of affordable housing in Sunnyvale, are considered for funding. Budgeted funds include the operating costs associated with direct implementation of these projects.
Neighborhood Improvements:
This activity is implemented by Neighborhood Preservation staff utilizing CDBG funding. It provides funding for street trees, streetscape improvements, neighborhood clean-up, landscape designs and other targeted projects to improve the physical appearance of the CD Strategy Action Area neighborhoods. To date, the program has been focused on the Neighborhood Enhancement effort in Lakewood Village. The goal is for 15 completed projects in FY2005-06.
Capital Projects
ADA Improvements
This activity is implemented by the Public Works Department utilizing CDBG funding. It provides retrofit of approximately 40 curbs per year to meet ADA requirements. Funding for FY2005-06 is recommended at $150,000, utilizing reallocated funds to increase support to this activity and increase the goal to 60 curbs in FY2005-06.
Sewer Infrastructure Project
In an effort to identify other City Department’s goals as they relate to the Consolidated Plan, the Housing Division hosted a meeting to solicit input from various City departments/divisions regarding their programs, services, funding, current needs, outreach efforts and existing gaps in services to residents in the community.
This provided an opportunity for City departments to submit requests for funding through the City’s internal project review process. Two requests for funding were received from the Public Works department. The first project would provide funding to reline or replace existing sanitary sewer main service connections, and rebuild eight manholes. The second project would provide funding to recondition 34 manholes. Both projects are located in areas of the City that have been identified as areas that are eligible for CDBG funding due to the number of low and very low income households located in those areas.
Senior Nutrition Site Improvement
The City received a request from the First United Methodist Church-Senior Nutrition Program, for funding of $6,000 to replace and expand one failing refrigeration unit at their site. Senior Nutrition provides lunches and recreation at the First United Methodist Church site at 535 Old San Francisco Road. Each day this agency serves approximately 191 low and very low-income seniors with balanced nutritional lunches and also distributes surplus foodstuffs for seniors to take to their homes. The funding to replace capital equipment will provide the agency with the maximum storage to manage food donations. The request for funding is provided in a letter included in Attachment C.
Funding for Outside Group Service Agencies:
CDBG funds have decreased by 6% or $85,183 this year. This decrease has occurred due to reductions in appropriations at the federal level. A total of $350,000 however, is recommended for outside agencies in FY2005-06, compared to $283,193 in FY2004-05. The proposed increase in funding to outside agencies is possible in FY2005-06 due to the high amount of program income received this year through early repayments of loans and the sale of a property that had been purchased with CDBG funds. Regulations require that no more than 15% of the grant allocation, plus 15% of the prior year program income (FY2004-05) may be committed to public services in any program year.
FY2005-06 is the first year of a two-year funding cycle to provide funding to human service agencies. This year, the City received requests for funding from 21 non-profit service agencies including two agencies that had not previously requested assistance from the City. During their January and February meetings, the Housing and Human Services Commission (HHSC) reviewed the staff’s assessment report on the performance of each human service agency for FY2003-04 and the current year from July 2004 to January 2005.
Written and/or oral presentations were made by outside human service groups to the Commission in February. During the March and April meetings the HHSC made funding recommendations, based upon the requests of the agencies, their performance records, the ranking of their proposals and the amount of funds available for the FY2005-06 program year.
Table IV presents the HHSC recommendations for funding outside groups in FY2005-06 totaling $450,000. This report deals with the $350,000 of CDBG funding for outside groups. On January 31, 2005 (RTC 05-039), City Council approved a cap of $100,000 of General Funds for support of outside groups for FY 2005-06. This report includes the HHSC recommendations for allocation of these funds; City Council will act on this recommendation as part of its adoption of the City Budget for FY 2005-06.
TABLE IV
Housing and Human Services Commission Recommendations for
Funding Outside Groups FY2005-06
|
Outside Groups
|
FY
2001 |
FY
2002 |
FY
2003 |
FY 2004 |
Request FY 2005 |
HHSC Recom. |
|
CDBG SUPPORTED |
|
|
CDBG |
GEN |
|
|
$16,170 |
$16,170 |
$16,500 |
$11,000 |
$15,000 |
$10,000 |
$0 |
|
Catholic Charities Ombudsman |
|
13,641 |
|