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Home My Public Portal About10) 9A CDBG 12-13 Annual AllocationCity Council January 17, 2012 Page 2 installation of ADA-approved playground equipment in Temple City Park and Live Oak Park, and the construction of wheelchair ramps at various intersections throughout the City. Over the past two years, the City's CDBG Program has received significant cuts, nearly $50 ,000 each year. The City's CDBG allocation for the FY 2012-2013 is estimated to be $207,236, shown in Attachment A. This figure may be adjusted by the Community Development Commission (CDC) based upon the eventual United States Department of Housing and Urban Development (HUD) allocation. It should be noted, the combined amounts of the programs below may be more than the estimated allocation for FY 2012- 2013. This is due to funds being carried over from previous years or "program incomen or interest received from loans paid back from the Housing Rehabilitation Loan Program. ANALYSIS: As stated above, the CDBG Program was created to assist low and moderate-income households. The annual household income limits are determined by the CDC each calendar year, which is provided in Attachment B. The income limits are based on the annual household income and the number of people that live in the household. Housing Rehabilitation Program (existing program): This on-going program provides deferred payment loans to extremely low-income, low-income and moderate-income homeowners to make necessary house repairs and/or correct Building and Zoning Code violations. With the Housing Rehabilitation loan program , the maximum loan amount is $25 ,000 with a simple interest rate of 3%. Payment is deferred until the sale of the property or a change of title. Staff suggests that the FY 2012-2013 allocation be increased to $150,000 due to the recent elimination of the Community Redevelopment Agency, which previously funded the City's the Handyworker Grant Program. Asbestos/Lead-Based Paint Testing and Removal Program (existing program): This on- going program offers grants to home improvement Joan participants whose homes have tested positive for asbestos or lead-based paint. The grant is used to mitigate or abate hazardous conditions and is required since Federal funds are being used. In reviewing recent rehabilitation projects, Staff estimates that the average cost of Asbestos/Lead-Based Paint testing is $2,000 per project, and Asbestos/Lead -Based Paint abatement work is $8,000 per project. Therefore, staff suggests that the FY 2012- 2013 allocation be $75,000 . Youth Scholarship Program (existing program): This is an ongoing program enabling youth under the age of 18 to participate in various City-sponsored recreation activities. The "scholarship" amount for City-sponsored recreation activities are 75% for low and City Council January 17, 2012 Page3 extremely low-income households, and 50% for moderate-income households. The Youth Scholarship Program qualifies as a "public service" program, and under the HUD CDBG guidelines a City can allocate a maximum of 15% of its annual allocation towards public service programs. Staff suggests that the FY 2012-2013 allocation be $31,085, which is 15% of the City's annual allocation. ADA Curb Cut Program (continuing program): Last year the City created an ADA Curb Cut Program to repair or install new ADA Curb Ramps at intersections that were out of compliance. Last year the City Council allocated $75,000 to this program; however, due to programmatic issues the project has been delayed. Staff suggests that the FY 2012- 2013 allocation be $100,000. General Administration (eliminated program): In the past, the CDC would allow up to 10% of the City's overall annual allocation for a General Administration Program to oversee all of the City's CDBG Programs. It should be noted that the CDC reduced the City's General Administration Program, for the FY 2011-2012, from 1 0% ($27 ,000) to 5% ($13,500) after receiving the CDC's final allocation from HUD. Due to anticipated deeper budget cuts, the CDC has decided to eliminate the funding of all General Administration Programs for the FY 2012-2013. Therefore, the existing General Administration Program is being eliminated at this time. CONCLUSION: The City Council is requested to review and approve above-mentioned CDBG programs and allocations for FY 2012-2013. Once the allocations are approved, they will be forwarded to the Community Development Commission (CDC) for their review and approval as the CDC is the agency that distributes CDBG funds to Temple City. FISCAL IMPACT: This action will tentatively impact the FY 2012-2013 City Budget by designating the expenditure of CDBG funds as follows: Housing Rehabilitation Loan Program: Asbestos Testing and Removal Program: Youth Scholarship Program: ADA Barrier Removal Program: ATTACHMENTS: $150,000 $ 75,000 $ 31,085 $100,000 A. CDBG Bulletin 11-0032 -Estimated Allocations for FY 2012-2013 City Council January 17, 2012 Page4 B. CDBG Bulletin 11-0031 -Income Guidelines for 2012 FISCAL YEAR 2012-2013 LOS ANGELES URBAN COUNTY PLANNING ESTIMATE ALLOCATIONS FOR PARTICIPATING CITIES Cities with CDBG amounts set-aside for Section 108 Loan payments are in bold. CITY ALLOCATION AGOURA HILLS $63,020 ARCADIA 284,034 AVALON 22,936 AZUSA 424,745 BELL 467,230 599,312 BELL GARDENS -558.488 10,824 BEVERLY HILLS 180,392 BRADBURY 2,737 CALABASAS 65,141 CERRITOS 189,685 CLAREMONT 145,819 COMMERCE 126,348 COVINA 304,342 CUDAHY 333,784 212,838 CULVER CITY w156.104 56,734 DIAMOND BAR 247,316 DUARTE 143,124 EL SEGUNDO 61,754 HAWAIIAN GARDENS 168,027 HERMOSA BEACH 66,307 IRWINDALE 12,136 LA CANADA-FLINTRIDGE 70,851 LA HABRA HEIGHTS 15,899 LA MIRADA 205,843 LA PUENTE 406,540 LA VERNE 114,711 LAWNDALE 308,206 LOMITA 130,190 MALIBU 54,260 MANHAITAN BEACH 102,913 MAYWOOD 360,535 MONROVIA 260,922 RANCHO PALOS VERDES 127,447 ROLLING HILLS ESTATES 20,185 CITY ALLOCATION SAN DIMAS 140,829 249,291 SAN FERNANDO -347,315 -98,074 SAN GABRIEL 342,885 SAN MARINO 47,076 SANTA FE SPRINGS 123,677 SIERRA MADRE 33,822 SIGNAL HILL 86,590 SOUTH EL MONTE 222,041 SOUTH PASADENA 105,988 I TEMPLE CITY _2o1 236 I TORRANCE 621,800 WALNUT 130,854 WEST HOLLYWOOD 218,352 WESTLAKE VILLAGE 22,125 12.12.11 -2010 Census Data Impact on Fonnula Grants-CDBG and HOME Background American Community Survey is New Annual Data Source for CDBG, HOME, and (in 2013) ESG. • The law implementing the Community Development Block Grant (CDBG) program calls for using "the most recent data compiled by the United States Bureau of the Census" for allocating the CDBG funds (42 U.S.C. 5302 (b)). • In accordance with this mandate, FY2012 marks the first year that the CDBG allocation formula will rely on the Census Bureau's new annual data source-the American Community Survey (ACS}-and the 2010 Census population counts. • Similarly HOME requires the formula to most recent census data, which likewise requires moving to ACS data in FY2012. • Any particular year's ESG fonnula allocation is based on the prior year's CDBG formula calculation. So for jurisdictions receiving ESG allocations, effects will not take place until2013. • Factors that determine formula allocations for block grants are, by statute: o HOME-high relative poverty, large number of renters in poverty, pre-1950 housing stock, poor housing conditions and high construction costs. o CDBG --Two formulas are used: Fonnula A measures population, poverty and overcrowded housing; Formula B measures poverty, pre-1940 housing, and growth lag (for Entitlements) or population (for States). Each grantee receives the greater of the two formula amounts, adjusted to fit the total appropriation amount. Q& A-General Q: Are the ACS data or the Census population counts appealable? A: HUD is a consumer of the data provided by the Census Bureau and any appeals would be made to the Census Bureau. It should be noted that Census updates population estimates on an annual basis and a portion of the ACS data wiff be updated annually on a rolling basis by replacing the oldest year's data with more current data. Q: Why is HUD Implementing these changes on the heels of the reductions to CDBG and HOME funding over the past two years? A: The CDBG and HOME authorizing statute requires HUD to use the most current available Census data to calculate the CDBG formula. The population count from the April 2010 Census is and the new annual data source American Community Survey is now the most current data source. Q: Does HUD have any discretion In the amount allocated to my jurisdiction? A: No. By law, HUD must allocate all CDBG and HOME funds in accordance with the formulas. Q: What help can HUD offer as our jurisdiction evaluates the use of CDBG and HOME funds at the local level? A: The CPO field office that serves your jurisdiction is the place to seek assistance at this point. Many grantees are facing the difficult task of re-evaluating the structure of their programs as it 1 will be difficult to sustain traditional funding patterns at the local level given the reduced resources. Your CPO representative can offer suggestions based on experience with other grantees. Further, CPO has launched a new, comprehensive technical assistance effort known as OneCPD which will include a website where grantees can pose questions and receive rapid responses on a wide range of issues including restructuring concerns. Additional information · will be forthcoming in the next few months with regard to One CPO. Q: Is It true that ACS does not cover very rural areas? If so, how are overcrowding and housing conditions In these areas taken Into consideration in the formulas, especially for states? A: Not true. ACS covers all areas . Q: How does HUD address the margin of error on ACS data, given that it Is a new Census product? A: HUD uses the Census Bureau's mid-point estimate for ACS as it always did with decennial census data. HUD trusts in the accuracy of the data provided by the Census Bureau and does not undertake any review of the data. g&A-CDBG Q: Can I see how the ACS data affects the CDBG allocation to my jurisdiction? A: HUD's Office of Policy Development and Research (PD&R) has just issued a report entitled ·Redistribution Effect of Introducing 2010 Census and 2005-2009 ACS Data into the CDBG Formula: The report explains the new data and includes several appendices that detail the effect of those data on CDBG formula factors and, hence, on CDBG allocations. A web link to the report was included with the email letter informing your jurisdiction of the CDBG and HOME planning estimates for FY 2012 Q: What other programs does HUD administer that can help fill the gap left by lower CDBG allocations? A: The range of programs is somewhat limited. The Section 1 08 loan guarantee program is part of CDBG and can be used for CDBG-eligible activities such as economic development, infrastructure and public facilities, and housing rehabilitation. COBG grantees may borrow up to five times their current CDBG allocation under Section 108. Grantees should also ensure that they are effectively leveraging other resources such as CDBG and HOME program income, other public funds and private funds. Q: Why did my jurisdiction's formula allocation decrease much more than the 11 percent decrease in the appropriation between 2011 and 2012? A: Many CDBG grantees will see their allocation decrease much more than the 11 percent decrease in the appropriation between 2011 and 2012. This can happen because of a combination of factors at work: the use of new Census data for 2012; the way the CDBG program formula works; and the number of grantees eligible for CDBG funding. The CDBG program uses two different formulas to calculate allocation amounts for entitlement grantees. The formulas for states are similar with the exception that population is substituted for growth lag in Formula 8 . 2 Formula A uses the following factors: • population (weighted at 25%); • number of poverty-level persons (weighted at 50%); and • number of overcrowded housing units (weighted at 25%). Formula B uses: • growth lag (weighted at 20%); • number of poverty-level persons (weighted at 30%); and • number of pre-1940 housing units (weighted at 50%). HUD computes an allocation amount for every grantee using both formulas; grantees receive their funding based on the higher of the two formula amounts (after a pro-rata reduction to make the sum of all allocations equal the appropriation level for the program). Finally, the number of entitlement grantees has increased by 17 from 2011 to 2012. Thus, not only is there less money in 2012, it must be divided up among more grantees, and different data will be used compute each grantee's allocation amount. Q&A-HOME Q: My jurisdiction's FY 2012 HOME allocation fell below the $500,000 participation threshold for the HOME Program. Will we sUII receive an allocation? Will we be required to make up the difference between our allocation and our formula allocation amount In order to continue to participate in HOME? A: Yes. As long as your jurisdiction received a HOME formula grant allocation in FY 2011, it will receive an FY 2012 allocation even if the allocation falls below $500,000. No, your jurisdiction is not required to make up the difference between your fonnula allocation and $500,000. Q: My jurisdiction's FY 2012 HOME allocation Is so small that we are not sure that we can administer the program with only 10% program administration allowed under the HOME regulations. If our community decides to decline the FY 2012 HOME allocation, what happens to our grant money? A: When a local Participating Jurisdiction (PJ) declines its HOME allocation, the funds that would have been awarded to the local government are added to the State's HOME allocation. The State may use the HOME funds in the same manner as the rest of its HOME allocation; it may choose to use the funds for a project or program in the community that declined the allocation, but it is not required to do so. Q: If my jurisdiction declines Its FY 2012 HOME grant but determines that It would like to resume participation as a HOME PJ at some future time, would we have to meet the HOME qualification threshold ($500,000) and potentially make up any shortfall (up to the $750,000 participation threshold) or would we continue to qualify as a PJ? A: All existing PJ that chooses to decline its HOME allocation for one or more years does not lose its ongoing qualification as a PJ . It will continue to be included in the HOME fonnula run and resume participation at its option. However, the rules applicable to HOME PJs that are consortia are somewhat different. If a consortium chooses to decline its allocation during the three-year period of its consortium agreement will continue to qualify as a PJ as long as its HOME consortium agreement has not expired (e.g., the consortium could decline Its allocation 3 in year 2 of its agreement and resume participation in year 3). However, once the three-year term of the consortium agreement is over, the consortium would no longer qualify as a PJ. Q: Why did my jurisdiction's formula allocation decrease much more than the 38 percent decrease In the appropriation between 2011 and 2012? A: Many HOME PJs saw decreases much larger than the 38 percent decrease in the appropriation between 2011 and 2012. The HOME statute requires HUD to use the most recent available data to run the HOME formula. In the past, the most recent data used has been the decennial census, which would have been used for the FY 2012 HOME formula. However, beginning in FY 2012, the Department used the most recent American Community Survey data for the HOME formula. The American Community Survey, which updates demographic information for approximately 20 percent of the United States each year, will be used to detennine subsequent years' HOME fonnula allocations. The HOME formula has six factors, which are: 1. Vacancy-adjusted rental units where the household head is at or below the poverty level. 2. Occupied rental units with at least one of four problems (overcrowding, incomplete kitchen facilities, incomplete plumbing, or high rent costs). 3. Rental units built before 1950 occupied by poor households. 4. Rental units described in #2 above multiplied by the ratio of the cost of producing housing for a jurisdiction divided by the national cost. 5. Number of families at or below the poverty level. 6. Population of a jurisdiction multiplied by a net per capita income. When the HOME formula is run each year, data from the American Community Survey for each PJ is applied to the six formula factors. The first and sixth factors are weighted 0.1; the other four factors are weighted 0.2. Since factors 2 through five are double-weighted, these factors take on increased significance in determining each PJ's fonnula allocation. The HOME formula's focus on the condition of housing and market conditions makes it very different from the CDBG formula. Q: Would my jurisdiction receive more HOME funds If it formed a consortium with neighboring jurisdictions? A: Forming a consortium with geographically contiguous units of local government almost always leads to an increase of funding over the current level if there is no change in the HOME appropriation. In FY 2012, there were actually two new consortia that did not receive a HOME allocation because of the unexpected, significant decrease in the HOME appropriation. HOME consortium is not easy. In fact, many consortia perform poorly and some eventually disband because the difficulty of administering a program with neighboring jurisdictions is often underestimated. If your jurisdiction is interested in forming a HOME consortium, the guide to Establishing and Managing a Successful HOME Consortium is prerequisite reading. The guide can be found here: http://www.hud.gov/offices/cod/affordablehousinq/programslhome/consortia/200608 quide.pdf. 4 Participating Agencies December 15, 2011 Page Two COMPARISON OF TERMS IN DETERMINING INCOME LEVELS CDBG SECTIONS PERCENT OF MEDIAN Extremely Low-Income Extremely Low-Income E_gual to or less than 30% Low-Income Very Low-Income 31% to 500/o Moderate-Income Low-Income 51%to 80% For all agencies utilizing CDBG-approved Public Self-Certification Forms, please be sure to incorporate these revised income guidelines into your fonns immediately. Should you have any questions, please contact your Program Manager. Sincerely, L ~ZALEZ,~ Community Development Block: Grant Division TG:AC:AM:LH:vu .K:\CDBG COMMON\Special Projccla\Bullctins\2011\2012 income guidelinc:s .doc: