REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Oliver Chi, City Manager
PREPARED BY: Ursula Luna-Reynosa, Director of Community Development
Subject:
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Approve the Section 3-Labor Compliance Plan, HOME Program Rehabilitation Standards, and the Affordable Housing Program Underwriting and Subsidy Layering Guidelines
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Statement of Issue:
The U.S. Department of Housing and Urban Development (HUD) requires the City to approve and adopt certain guidelines and standards related to City programs funded by Community Development Block Grant (CDBG) and HOME Investment Partnerships (HOME) funding. The guidelines prepared for the Section 3 Labor Compliance Plan, HOME Program Rehabilitation Standards, and the Affordable Housing Program will assist staff in complying with HUD standards and requirements when implementing Federally-funded City projects and programs.
Financial Impact:
There is no fiscal impact to approve and adopt the recommended actions.
Recommended Action:
recommendation
A) Approve and adopt the Section 3-Labor Compliance Plan; and,
B) Approve and adopt the HOME Program Rehabilitation Standards; and,
C) Approve and adopt the Affordable Housing Program Underwriting and Subsidy Layering Guidelines.
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Alternative Action(s):
Do not approve the recommended actions above. However, the City would be out of compliance with HUD regulations and potentially subject to future audit findings.
Analysis:
BACKGROUND/DISCUSSION
As a Federal entitlement city, the City of Huntington Beach annually receives approximately $1.2 million in CDBG funds and $600,000 in HOME funds to be used for activities/programs for low and moderate income individuals and families. CDBG and HOME funding has been provided for a variety of activities including, but not limited to, the following: 1) development and preservation of affordable housing, 2) tenant rental assistance, 3) homelessness prevention services, 4) senior care and youth services, and 5) infrastructure improvement projects. In order for the City to receive these funds, the City is required by HUD to have adopted implementing guidelines and standards in place for CDBG and HOME-related programs. The City Council is being asked to consider approval of certain guidelines and standards related to labor compliance, City’s housing rehabilitation program, and City funding underwriting criteria for an affordable housing project. The following sections briefly describe these implementing guidelines.
Section 3-Labor Compliance Plan
Section 3 is a provision of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) that is regulated by the provisions of 24 CFR 75. Section 3 regulations ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons.
The Section 3-Labor Compliance Plan outlines how the City and its subrecipients, contractors and subcontractors will comply with HUD’s Section 3 requirements in implementing the City’s CDBG and HOME programs. The City will, to the greatest extent feasible, ensure that employment and other economic opportunities are directed to low- and very low-income persons and to eligible businesses and requires the same of its contractors.
For housing and community development financial assistance, the Section 3-Labor Compliance Plan applies to housing rehabilitation, housing construction, and other public construction projects that exceed $200,000 or more of housing and community development financial assistance from one or more HUD programs. For 2021-2022, the City has two projects that will meet the $200,000 criteria threshold: 1) Huntington Beach Senior Housing Project (HOME funds); and 2) ADA Curb Cuts in Maintenance Zone 5 (CDBG capital funds). Attachment 1 contains the Section 3-Labor Compliance Plan.
HOME Program Rehabilitation Standards
The HOME Program Rehabilitation Standards (“Rehab Standards”) are designed to outline the requirements for building rehabilitation for all HOME-funded multi-family and single-family housing projects in the City. The Rehab Standards, though a requirement specifically to the development entity in direct receipt of HOME funding, are written to provide guidance to all relevant members of a project development team.
The goal of the HOME Program is to provide functional, safe, affordable and durable housing that meets the needs of the tenants and communities in which the housing is located. The purpose of the Rehab Standards is to ensure that property rehabilitation puts each building in the best possible position to meet this goal over its extended life and that, at a minimum, all health and safety deficiencies are addressed. The Rehab Standards protocol will provide guidance and procedures that the City has established for determining the scope of work, and the materials and methods required to inspect a project. Attachment 2 contains the HOME Program Rehabilitation Standards.
Affordable Housing Program Underwriting and Subsidy Layering Guidelines
The City supports the acquisition, rehabilitation, and new construction of affordable rental housing for low‐, very low‐, and extremely low‐income households with its annual funding allocations from HOME funds and available local housing funds including, but not limited to: 1) former Redevelopment Agency housing set-aside funds (referred to as Low- and Moderate-Income Housing Asset Fund); and 2) the City’s Housing Trust Fund, which includes housing in-lieu fees. HOME regulations require the City to identify minimum elements the City must consider and requires the City to establish specific guidelines against which affordable housing projects are to be evaluated. HOME regulations also require that the City conduct underwriting and subsidy layering reviews of each project prior to committing Federal assistance.
The purpose of the Affordable Housing Program Guidelines is to describe the City’s housing policy objectives, the range of affordable housing activities available to advance these objectives, and the manner in which transactions will be evaluated and selected for funding. The overall goal of these guidelines is to ensure prudent underwriting and subsidy layering review and to ultimately achieve compliance with applicable Federal, State, and City laws, ordinances, regulations, and policy objectives.
The Affordable Housing Program Guidelines provides information on eligible activities and costs, eligible applicants, general project requirements, affordability, development requirements and other pertinent information relevant to the application for HOME-assistance and other City funding for the development of affordable housing. Currently, the City has one project that will be subject to the Affordable Housing Program Guidelines and that is the Huntington Beach Senior Housing Project (funded by HOME and City Housing Trust Funds). Attachment 3 contains the Affordable Housing Program Guidelines.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(4), government fiscal activities that do not result in a physical change in the environment and do not commit the lead agency to any specific project, do not constitute a project. Therefore, these activities are exempt in accordance with CEQA Guidelines Section 15060(c)(3).
Strategic Plan Goal:
Non Applicable - Administrative Item
Attachment(s):
1. Proposed Section 3-Labor Compliance Plan
2. Proposed HOME Program Rehabilitation Standards
3. Proposed Affordable Housing Program Underwriting and Subsidy Layering Guidelines