REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Eric G. Parra, Interim City Manager
VIA: Jennifer Villasenor, Director of Community Development
PREPARED BY: Charles Kovac, Housing Manager
Subject:
title
Consideration of the 2024-2025 Annual Action Plan for Federal Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) Entitlement Grant Programs
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Statement of Issue:
The City receives CDBG and HOME federal entitlement grant funds annually from the U.S. Department of Housing and Urban Development (HUD). To remain eligible for these grant funds, the City is required to submit an Annual Action Plan (Action Plan) to HUD each year outlining how these funds will be used during the upcoming fiscal year. As part of this annual process, the Citizen Participation Advisory Board (CPAB) evaluates funding applications and makes funding recommendations for CDBG public services activities to the City Council. The CPAB recommendations for Fiscal Year 2024-25 are summarized in Table 2 of Attachment 1 of this report and described in detail in the 2024-25 Action Plan (Exhibit “B” of Attachment 2). The deadline for submission of the 2024-25 Action Plan to HUD is May 15, 2024.
Financial Impact:
The City’s estimated 2024-25 CDBG and HOME program budget comprised of $1,264,681 in CDBG and $1,235,731 in HOME funds is based upon the current 2023-24 funding allocations. The CDBG and HOME program budget includes HUD’s estimated annual entitlement allocation, carryover funds from prior fiscal year, and program income.
Recommended Action:
recommendation
Staff recommends that the City Council approve and authorize the following in compliance with the Consolidated Plan Procedures of 24 CFR Part 91:
A) Conduct a public hearing for the 2024-25 Action Plan; and,
B) Adopt Resolution No. 2024-17, “A Resolution of the City Council of the City of Huntington Beach, California, Approving the 2024-2025 Annual Action Plan for Federal Community Development Block Grant and HOME Investment Partnerships Programs”; and,
C) Authorize the City Manager to sign all necessary related documents.
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Alternative Action(s):
Do not approve the 2024-25 Action Plan, and direct staff accordingly.
If the City does not submit an approved 2024-25 Action Plan to HUD by May 15, 2024, the City will be out of compliance with HUD regulations and would likely forfeit CDBG and HOME funding. Alternatively, the City Council may choose to modify any of the funding recommendations for CDBG and HOME projects and programs within the aggregate funding limits outlined in this report.
Analysis:
Background
Each year, the City of Huntington Beach receives entitlement grant funds from HUD under the CDBG and HOME programs. According to program objectives set forth in HUD regulations, funds from these programs must be used to benefit lower-income Huntington Beach residents, as well as the community needs identified in the City’s approved 2020-24 Consolidated Plan. HUD regulations require public participation in the allocation of CDBG and HOME funds. Therefore, each year the City issues a Notice of Funding Availability to invite local community organizations to submit applications for public service programs.
The CPAB reviews all eligible applications, receives public input, hears oral presentations from the applicants, and makes funding recommendations to the City Council. These recommendations are outlined in the attached Action Plan (Exhibit “B” of Attachment 2), which must be approved by the City Council at a public hearing and submitted to HUD by May 15, 2024.
2024-25 CDBG and HOME Funding Levels
As of this report, HUD has yet to release the City’s funding levels for the 2024-25 Program Year. Therefore, estimated funding levels in this report and the attached draft 2024-25 Action Plan are based on the current year 2023-24 allocations. In addition to the CDBG and HOME annual allocations, the City will also have available program income funds, which are payments on outstanding loans previously made by the City, and carryover funds, which are unused funds from previously approved projects that are now available for new activities. CDBG rules limit the use of carryover funds only for eligible capital projects. As shown in Table 1 of Attachment 1, the City will receive an estimated $1,171,668 in CDBG entitlement funds, approximately $60,013 in prior year carryover CDBG funds, and is estimated to receive $33,000 in program income for a total of $1,264,681 in 2024-25 CDBG funding resources. As also shown in Table 1 of Attachment 1, the City will receive an estimated $668,370 in HOME entitlement funds, approximately $467,361 in HOME carryover funds, and is estimated to receive $100,000 in program income for a total of $1,235,731 in 2024-25 HOME funding resources.
Funds Available for CDBG Public Services Programs
Federal regulations allow the City to designate up to 15 percent of the CDBG allocation for public service programs. Eligible public service programs must be directed toward improving community services concerned with services such as employment, childcare, health, substance abuse, education, recreation or welfare for low-income residents. The maximum amount of funds available for public service programs is estimated at $175,750.
Funds Available for CDBG Capital and Housing Preservation Projects
The estimated amount of funds available for CDBG Capital and Housing Preservation Projects is $854,597. CDBG regulations allow a variety of capital projects and activities that benefit low-income residents, including the development of affordable housing, rehabilitation and preservation of existing housing, improvements to public facilities to comply with requirements of the Americans with Disabilities Act, and special code enforcement programs.
Funds Available for HOME Capital Projects
HOME regulations allow capital projects primarily for the creation of affordable housing and temporary rental assistance for low-income residents. The estimated amount of funds available for HOME Capital Projects is $1,168,894.
Funds Available for Program Administration
Up to 20 percent of the City’s CDBG allocation from HUD, estimated at $234,334, and 10 percent of its HOME allocation, estimated at $66,837, may be used for planning and administration. In addition to the 2024-25 CDBG and HOME administration funding described above, available unspent HOME administration funding in the amount of $168,387 from FY 2019-20 is proposed to be used on activities in 2024-25 including the following: 1) preparation of the 2025-29 Consolidated Plan; 2) preparation of the Analysis of Impediments to Fair Housing Choice, a required component document of the Consolidated Plan; 3) fair housing services recommended to be provided by the Fair Housing Foundation; and 4) staff salaries to implement the above activities. Fair housing services are a HUD mandated activity for all jurisdictions and include tenant/landlord mediation, unlawful detainer assistance, fair housing education, and investigating claims of housing discrimination.
Fiscal Year 2024-25 Funding Recommendations
On February 1, the CPAB conducted a noticed public meeting that provided residents the opportunity to participate in the CDBG funding recommendation process. The CPAB received public comments and heard presentations from seven CDBG public services applicants. Subsequently, on February 22, the CPAB met to deliberate and make funding recommendations to the City Council, and by a unanimous vote, recommended that the City Council fund four of the six public services applications that were received (see Table 2 of Attachment 1).
The City received one application for fair housing services from the Fair Housing Foundation, and this program is recommended to be fully funded in the amount of $35,000 with HOME program administration funds.
CDBG capital and housing preservation projects consist of the City’s Housing Rehabilitation Program, Special Code Enforcement Program, Maintenance Zone 2 ADA Improvements, and Tenant Based Rental Assistance (TBRA) Program Administration in the total amount of $854,597.
On March 19, the City Council and CPAB held a joint study session to review these funding recommendations, which are summarized in Table 2 of Attachment 1 and described in detail in the 2024-25 Action Plan (Exhibit “B” of Attachment 2).
CDBG & HOME Funding Alternatives
Because HUD has not yet provided the City with its 2024-25 CDBG and HOME allocations, staff and CPAB have made the following recommendations to adjust the funding levels for each activity in the event that HUD allocations are higher or lower than what is estimated in this report. If approved, staff will modify the 2024-25 Action Plan in accordance with these alternatives once HUD has provided the allocations and prior to submitting the 2024-25 Action Plan to HUD. The recommended alternatives are as follows:
Public Services allocations:
1. If CDBG funding is less than expected: Maintain the recommended funding awards to the Oakview FRC Drop-In Recreation Program and Robyne’s Nest and reduce funding to Project Hope Alliance and StandUp for Kids by equal share (50% / 50%).
2. If CDBG funding is more than expected: Allocate increased funds by equal share (50% / 50%) to the Oakview FRC Drop-In Recreation Program and Robyne’s Nest. No additional funds would be allocated to Project Hope Alliance or StandUp for Kids.
Capital and Housing Preservation Project allocations:
1. If CDBG funding is less than expected: Maintain the recommended funding allocations for Special Code Enforcement and TBRA Program Administration and reduce funding to the Housing Rehabilitation Program and Maintenance Zone Area 2 ADA Improvements equally.
2. If CDBG funding is more than expected: Maintain the recommended funding allocations for Special Code Enforcement and Maintenance Zone Area 2 ADA Improvements and increase funding to the Housing Rehabilitation Program and TBRA Program Administration equally.
3. If HOME funding is less or more than expected: Adjust the Mobile Home TBRA program accordingly. Other HOME capital programs to remain unchanged.
Administration allocations:
1. If CDBG funding is less or more than expected: Adjust CDBG Administration accordingly to maintain the 20 percent program cap.
2. If HOME funding is less than or more than expected: Adjust HOME Administration and Community Housing Development Organization (CHDO) funding accordingly to maintain the 10 percent and 15 percent program requirements.
Environmental Status:
This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Since federal dollars are being used for the proposed CDBG and HOME activities, National Environmental Policy Act (NEPA) compliance will be required prior to execution of funding agreements and disbursement of funds. The City will complete all NEPA Compliance for the approved CDBG and HOME activities prior to the start of the Program Year (July 1, 2024).
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. FY 2024-25 Available CDBG and HOME Funding and Recommendations
2. Resolution No. 2024-17, “A Resolution of the City Council of the City of Huntington Beach, California, Approving the 2024-2025 Action Plan for Federal Community Development Block Grant and HOME Investment Partnerships Programs.”
3. PowerPoint Presentation - May 7, 2024 City Council Meeting