For City Council Meeting August 13, 2024
TO: Honorable Mayor and City Council
FROM: G. Michael Milhiser, Interim City Manager
AUTHOR: Colby Cataldi, Director of Community Development
Title
Request City Council to 1) Conduct a Public Hearing to solicit public comments from interested citizens; 2) Adopt a Resolution No. 8281 approving Substantial Amendment No. 1 to the 2020-2025 Consolidated Plan and proposed changes to the previously approved FY 2024-2025 Annual Action Plan; 3) Authorize the City Manager to submit the Substantial Amendment of the Con Plan and changes to the previously approved Annual Action Plan to the U.S. Department of Housing and Urban Development (HUD); 4) Authorize the City Manager to take all actions necessary to implement the programs identified in the AAP and Con Plan; 5) Adopt Budget Resolution No. 8282 Authorizing the allocation of $374, 469.26 HOME funds to the FY 24-25 Fiscal Year Budget with a one-time general fund match of $125,530.74
(ACTION)
Body
RECOMMENDATION(S)
Staff recommends that the City Council:
1) Conduct a Public Hearing to solicit public comments from interested citizens;
2) Consider and adopt a resolution approving Substantial Amendment No. 1 to the 2020-2025 Consolidated Plan and proposed changes to the previously approved FY 2024-2025 Annual Action Plan;
3) Authorize the City Manager or his designee, to make all conforming modifications and edits, and to execute all implementing documents required by HUD; and
4) Adopt Budget Resolution No. 8282 Authorizing the allocation of $374, 469.26 HOME funds to the FY 24-25 Fiscal Year Budget with a one-time general fund match of $125,530.74
BACKGROUND
The U.S. Department of Housing and Urban Development (HUD) requires that the grantee cities, such as Rialto, prepare an Annual Action Plan every year as a condition to receiving Federal funding under the Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME), and Emergency Solutions Grants Program (ESG), in order to meet the goals and objectives approved by the City Council in the Five-Year Consolidated Plan.
The City of Rialto (City), as an entitlement City, has previously only received Community Development Block Grant (CDBG) funds on an annual basis from the U.S. Department of Housing and Urban Development (HUD) to carry out a wide range of community development activities, which benefit low- and moderate-income residents.
The Annual Action Plan identifies how the CDBG program funds will be utilized to provide programs and projects that benefit low- and moderate-income households and neighborhoods in the City. It also serves as the City’s official grant application to HUD. Normally, the Action Plan is prepared during the prior Fiscal Year (FY) to ensure compliance with the City’s approved Citizen’s Participation Plan and CDBG implementing regulation 24 CFR 92-105. The 2024-2025 CDBG Annual Action Plan was approved by City Council during the April 23, 2024, Public Hearing.
On May 18, 2024, the City was notified by the Department of Housing and Urban Development of their allocation of HOME funds, after the 2024-2025 Annual Action Plan was approved and adopted by City Council on April 23, 2024.
The City is electing to opt into the Federal HOME Investment Partnership Program (HOME) program as a HOME Participating Jurisdiction (PJ). As a HOME PJ entitlement community, the City will be receiving HOME fund allocations from the United States Department of Housing and Urban Development (HUD) for the first time in FY 2024-2025 (July 1, 2024 - June 30, 2025).
In accordance with the City’s Citizen’s Participation Plan, when a substantial change (i.e., adding an activity, canceling an activity, redirecting funds, or receiving additional funding) is proposed to the City’s Annual Action Plan or the Consolidated Plan, the City requires that the public be notified, and a Public Hearing be held to allow the public an opportunity to comment on the proposed substantial changes.
DISCUSSION
The City is proposing Substantial Amendment No. 1 to the 2020-2025 Consolidated Plan and changes to the previously approved FY 2024-2025 Annual Action Plan. Therefore, these Substantial Amendments and changes must be made available to the general public for a period of 30 days in order to provide them with an opportunity to review the proposed changes.
In compliance with the City’s approved Citizen Participation Plan and implementing regulation 24 CFR 92-105, a Public Notice was published to solicit public comments from interested citizens and to consider and approve the proposed Substantial Amendment to the 2020-2025 Consolidated Plan and proposed changes to the previously approved FY 2024-2025 Annual Action Plan. The public hearing was noticed on July 12, 2024. The 30-day public review and written comment period begins July 13, 2024 and runs through August 13, 2024. This item was presented to the Economic Development Committee on July 24, 2024.
HOME Investment Partnerships Program (HOME) - Grant Purpose
The Home Investment Partnerships Program was established by the Title II of the Cranston-Gonzalez National Affordable Housing Act. The objectives of the HOME program include:
• Expanding the supply of decent and affordable housing, particularly housing for low- and very low-income residents,
• Strengthening the abilities of State and local governments to design and implement strategies for achieving adequate supplies of decent, affordable housing,
• Providing financial and technical assistance to participating jurisdictions, including the development of model programs for affordable low-income housing; and
• Extending and strengthening partnerships among all levels of government and the private sector, including for-profit and non-profit organizations, in the production and operation of affordable housing.
Housing Related Eligible Uses of HOME funds
• Acquisition
• Rehabilitation
• New construction of rental and homeownership housing
• Direct homebuyer assistance (loans, grants, down payment and closing cost assistance)
• Tenant-based rental assistance
Based on the current need and expressed interest by residents, staff proposes allocating funds for a Residential Rehabilitation Grant Program. Upon approval of this item from the City Council, staff will work on developing guidelines based on HUD regulations for HOME funded programs.
HOME - Eligible Costs and Uses for Residential Rehabilitation for Homeownership Housing
|
Hard Costs • Construction costs required to meet the rehabilitation standards and/or applicable codes, standards, and ordinances, • Essential improvements, • Energy-related improvements, • Lead-based paint hazard reduction, • Accessibility modifications for disabled persons, • Repair or replacement of major housing systems, • Repairs and general property improvements of a non-luxury nature, and • Site improvements and utility connections. |
Soft Costs • Appraisals, • Pest inspections, • Work write-ups, • Initial and job progress inspections, • Project costs incurred by the PJ that are directly related to a specific project. |
Ineligible uses or repair programs as standalone programs, such as:
• Weatherization programs,
• Emergency repair programs,
• Handicapped accessibility programs.
HOME funds can be used to pay for any of these costs, but only when they are undertaken in conjunction with overall rehabilitation of the unit.
The following programs may be added, increased, reduced, or eliminated at the discretion of the City Council:
Proposed Substantial Amendment No.1 to the 2020-2025 Consolidated Plan will amend Goal No. 3, as noted below:
• Preserve the supply of affordable housing - to include Residential Rehabilitation Grants via HOME funds
Proposed changes to the previously approved FY 2024-2025 Annual Action Plan will authorize the addition of HOME funds as follows:
|
Activity |
Allocation |
|
HOME Administration (10%) |
$ 37,446.93 |
|
Mandatory CHDO Set-Aside (15%) |
$ 56,170.39 |
|
Residential Rehabilitation Grants |
$ 280,851.94 |
|
TOTAL HOME ALLOCATION: |
$ 374,469.26 |
The HOME allocation planning target for Rialto is $374,469.26 and the city would need to provide a one-time amount of $125,530.74 to meet the initial participation threshold of $500,000 for the HOME program. HOME funds must be matched by nonfederal resources. Each year after the initial allocation is received, the City’s allocation will be determined based on formula allocation under § 92.50 <https://www.ecfr.gov/current/title-24/section-92.50> that is equal to or greater than $750,000.
All Participating Jurisdictions (PJs) must contribute or match no less than 25 cents for each dollar of HOME funds spent on affordable housing. As the City draws funds from HOME Investment Trust Funds, they incur a match liability, which must be satisfied by the end of each federal fiscal year. The matching contribution adds to the resources available for HOME-assisted or HOME-eligible projects and must come in the form of a permanent contribution to affordable housing.
The HOME statute provides for a reduction of the matching contribution requirement under three conditions: 1) fiscal distress; 2) severe fiscal distress; and 3) for Presidentially-declared major disasters covered under the Stafford Act. The potential for a HOME match reduction is determined by HUD every fiscal year.
ENVIRONMENTAL IMPACT
The request is not a Project as defined by Section 15378 of the California Environmental Quality Act (CEQA).
LEGAL REVIEW:
The staff report has been reviewed and approved by the City Attorney.
FINANCIAL IMPACT
Operating Budget Impact
The funding for the proposed 2024-2025 HOME projects totaling as estimated $374,469.26 will come from the City’s 2024-2025 HOME funds allocation from the U.S. Department of Housing and Urban Development (HUD). The City is required to provide a one-time amount of $125,530.74 to meet the initial participation threshold of $500,000 for the HOME program.
Capital Improvement Budget Impact
There is no impact to the Capital Improvement Budget.
ATTACHMENTS
1. Draft 2020-2025 Consolidated Plan - Substantial Amendment No.1
2. Draft FY 2024-2025 Annual Action Plan - proposed changes to the previously approved AAP
3. PowerPoint
4. Resolution FY24-25 Substantial Amendments
5. Budget Resolution Authorizing Allocation of Home Funds