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HomeMy Public PortalAbout12) 9A CDBG Funds for FY 2012-13City Council July 17, 2012 Page 2 previous fiscal year (i.e., FY 2011-12), that needed to be allocated and expended or the City could jeopardize losing CDBG funds (see Attachment "B"). 5. On June 19, 2012, City Council approved the agreement with Transtech Engineering (Transtech) for: City Engineer/Public Works and related capital projects services; to provide the necessary assistance to staff and ensure that the City implements projects in a timely manner; and expends CDBG funds in accordance with U.S. Housing and Urban Development (HUD) federal requirements. 6 . On June 27, 2012, City staff met with the CDC to discuss the City's plan to allocate uncommitted funds to the ADA Access Ramp and Sidewalk Improvements Project and the Housing Rehabilitation Program. 7. On July 2, 2012, a Public Notice was published in the Temple City Tribune identifying programs to implement in FY 2012-13 that meet the City's needs along with addressing the proposed increase to CDBG Program allocations and the need to expend unexpended CDBG funds for FY 2012-13. 8. On July 3, 2012, the City held a kick-off meeting with Transtech and included Willdan to discuss the ADA project as a high priority that would assist the City in expending these CDBG Funds. 9 . On July 12, 2012, staff met with Transtech and Willdan to finalize the implementation procedures for the ADA Barrier Removal project. ANALYSIS: Since the City Council's approval of the City's Fiscal Year (FY) 2012-13 Community Development Block Grant (CDBG) program in January, staff has been working diligently with the Los Angeles County Community Development Commission (CDC) to correct some deficiencies with the City's housing rehabilitation program which have now been resolved. The delay in implementing these changes has spanned over two fiscal years which means that the City has accumulated $859,696 in unexpended funds. Per the CDC's letter dated May 21, 2012 (see Attachment "B"), the City must commit to expend $412,755 by December 31, 2012 to meet the CDC's drawdown expenditure requirements, or risk losing these funds. In the City's most recent meeting with the CDC in June, staff assured the CDC that the City could meet the expenditure of these funds by the end of the calendar year by reallocating the funds as recommended and by implementing the action plan outlined below: PROGAM FUNDING REALLOCATION RECOMENDATIONS: • Increase the Housing Rehabilitation Loan Program by $149,015 (i.e ., from City Council July 17, 2012 Page 3 $150,000 to $299,015); • No change to the approved funding for the Asbestos Testing and Lead Removal Program (remain at $75,000); • No change to the approved funding of the Youth Scholarship Program (remain at maximum allowed $31 ,070); and • Increase the ADA Barrier Removal Program by $284,000 (i.e ., from $100,000 to $384,000). [It should be noted that as the City's consultant, Transtech, completes a more detailed analysis of the ADA Barrier Removal project in the next few weeks, additional funding, if needed, for the ADA project could be presented to the City Council for consideration to reallocate additional funds.]. ACTION PLAN FOR IMPLEMENTATION: • Housing Rehabilitation Program (Including the Asbestos Testing & Lead Removal): The Housing Rehabilitation Loan Program is currently in place and any additional funding could allow for more loans to be issued. The housing loan program is being implemented by Willdan, with several housing rehabilitation projects currently in process . Willdan , has also been working with homeowners to qualify them for the program and has been completing inspections and work write-ups to provide energy efficiency and home improvements funded with CDBG funds. • Youth Scholarship Program: The City's Youth Scholarship Program is limited to 15% of the City's annual allocation , which is $31,070 for FY 2012-13, so the City is unable to add additional funds to this program. • ADA Barrier Removal Program: In the June meeting with the CDC, staff and consultants reviewed the aforementioned action plan and the overall process to complete the expanded ADA Barrier Removal Program . We confirmed the City's commitment to meeting an aggressive schedule for the construction of 80 proposed ADA ramp locations. The process for a large scale construction project now requires a more extensive public works construction bidding process . This has changed the City's past practice to have the Los Angeles County Department of Public Works construct the ADA ramps per its existing General Services Agreement with the County. Also, due to the County Public Works ' 20% overhead charge, the CDC is not allowing the City to use the County Public Works for this ADA project. City Council July 17, 2012 Page 4 Staff assured the CDC that it would utilize its capable consultant resources to meet all the required steps in the construction process which includes: survey, design and specifications preparation; bid advertising and award of contract; construction; labor compliance monitoring; and closeout and City Council acceptance . Thus far, Willdan provided a preliminary estimate of $4,000 per corner for the construction costs with an additional 20% or $800 per corner for design and bid specifications. Therefore , staff is requesting to increase the total ADA Barrier Removal Project for FY 2012-13 from $100,000 to $384 ,000. As Transtech continues the surveying work, it is possible that additional ADA curb and sidewalk work or costs could be identified and then be considered for additional funding. It is staffs assessment that following the recommended plan of action, we are very optimistic that the City will utilize these CDBG funds by December 31 , 2012 for the proposed projects, and that the City will not be in a position to lose these funds. CONCLUSION: The City Council is being requested to review and approve the aforementioned CDBG programs and the increased allocations for FY 2012-13. 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 affect 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 Access Ramps and Sidewalk Improvements Project ATTACHMENT(S): $299,015 $ 75,000 $ 31,070 $384,000 A . City Council CDBG FY 2012/13 Staff Report, January 17, 2012 B. Los Angeles Community Development Commission Letter, dated May 21, 2012 CityCounctr January 17, 2012 Page2 installation of ADA-approved playground equipment in Temple City Pan< 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, nearty $50,000 each year. The City"s CDBG allocation for the FY 2012-2013ls estimated to be $207,236, shown in A1tachment 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 income" 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 {s)(/stjnq program): This on-going program provides deferred payment loans to extreme1y 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 proaram): 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 AsbestosA..ead-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 Scholarsbie 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 ljpublic 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 CutP Cut Program fcontlnuing proaramJ: Last year the City created an ADA Curb Cut Program to repair or jnstall 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. G9nsral Administration (9/iminated proaramJ: In the past, the CDC would allow up to 1 0% of 1he 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 10% ($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 abova.mentioned CDBG programs and allocations for FY 2012-2013. Once the allocations are approved, they will be forwarded to the Community Development Commission (CDC) tor 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-Q032 -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 cmES Cities with CDBG amounts set-a&lde 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 -158.104 56,734 DIAMOND BAR 247,316 DUARTE 143,124 ELSEGUNDO 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 205843 LA PUENTE 406.540 LAVERNE 114.711 LAWNDALE 308,206 LOMITA 130 190 MAUBU 54,260 MANHATTAN BEACH 1<>2 913 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 SfERRA MADRE 33,822 SIGNAL HILL 86,590 SOUTH EL MONTE 222,041 SOUTH PASADENA 105,9881 l TEMPLE CITY -~207236 j TORRANCE 621,800 1 WALNUT --130,85~~ WEST HOLLYWOOD 218,352 1 WESTLAKE VfLLAGE 22,125 12.12.11 -2010 Census Data Impact on Formula Grants-CDBG and HOME Background American Community SuNey Ia New Annual Data Source for CDBG, HOME, and (In 2013) ESG. • The law Imple menting lhe Community Development Block Grant {CDBG) program caHs for using "lhe most recent data compiled by the Unfted States Bureau of the Census" for aQocating the CDBG funds (42 U.S.C. 5302 (b)). • In accordance with this mandate, FY2012 mari<s the first year that the CDBG alloeatJon fonnula will rely on the Census Bureau's new annual data soun:&-lhe American Community Sutvey (ACS)-and the 2010 Census population counts. • Slmilariy HOME requires the fonnula to most recent census data, which llke\Nise requires moving to ACS data in FY2012. • Any particular y ear's E'SG fonnula aDocation is based on the prior year's COBG fonnula catcutallon. So for jurisdictions racefving ESG allocations, effects will not take place unUI2013 . • Factors that determine formula allocations for bfcx;k granls am, by statute : o HOME-high relative poverty, large number of ranters in poverty, pre~1950 housing stock , poor housing conditions and high coostructfon costs. o CDBG -T'NO fcnnulas are used: FonnuJa A measures pop~.~lation, povarty and overcrowded housing ; Formula B measures poverty. pre.-1940 housing, and growth lag (for EntlHemenls) or populatioh (for Slates). Each grantee recelves 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: HUO 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 lhe ACS data will be updated annually on a roBing basis by replacing lhe eldest year's data with more current data. Q: Why Is HUD Implementing these changes on the heels of the reductions to CDBG and HOME rundtng over the past two years? A: The CDBG and HOME authorizing statute requlras HUO to vse the most current available Census data to calculate lha CDBG formu la. 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 rny jurisdiction? A: No. By law, HUO must alloeate all COBG and HOME' funds In accordance with the formulas . Q: What help can HUD offer as our jurlsdlctJon evaluates the use of CDBG and HOME funds at the local level? A: The CPO fie{d office that serves your jurisdiction Is the prace to seek assistance at this point. Many grantees are facing the dlfffcult task of re-evaluating the structure of their programs as It 1 will be difficult to sustain traditional fundmg patterns at lhe local level given the reduced resouroes. Your CPO representatlva can offer suggestions based on experience with other grantees. Further. CPD has launched a new. comprehensive technical assistance effort known as OnaCPD which wDf include a website where grantees can pose questions and receive rapid responses on a wide range of Issues lndudlng restructuring concerns. AddltJonal lnformaUon · will be forthcoming in the next few months with ragard to One CPO. Q: Is It true that ACS does not cover very rural areas? Jf .so, how are overcrowding and housing conditions In these areas taken Into consideration In the formulas, especially for states? A: Not true. ACS covers aU areas. Q: How does HUD address the margin of error on ACS data, given that lt Is a new Census product? A; HUO uses the Census Bureau's mfd-polnt 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 raView of the dala . Q&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 (P D&R) has just issued a report entitled •Redistribution Effed of Introducing 2010 Census and 2005-2009 ACS Data Into the COBG Formula.'" The raport explains the new data and includes several appendices 1hat detaU the affect of those data on CDBG formula factors and, hence, an CDBG allocations. A web link to the report was included with the small letter infonnlng your Jurisdiction of the CDBG and HOME planning estimates ror FY 2012 Q: What other programs does HUD admlnl&ter that can help fill the gap left by lower CDBG allocatfons? A; The range of programs is somewhat limited. The Section 108 loan guarantee program is part of COBG and can be used for CDBG-eligible activities such as eoonomlc development, infrastructure and public facilities, and housing rehabllitaUon. CDBG grantees may borrow up to frve times their current CDBG allocaUon under Section 1 OB. Grantees should also ensure that they are effecdvely leveraging otfler resources such as COBG and HOME program Income, other public funds and private funds. Q: Why did my jurl•dictlon's fonnula •IIDCatlon decraasa much more than the 11 pen:ent decraase 1n the approprfatJon between 2011 and 2012? A: Many COBG grantees will sae their allocaUon decrease much more ihan the 11 percent decrease in the appropriation between 2011 and 2012. This can happen because of a combination of f actors at wor1c: tha use of new Census data for 2012; the way the COBG program formula works; and the number of grantees eligible for COBG funding. The CDBG pr ogram uses two different formulas to calculate aDocatlon amounts for entfUement grantees. The formulas for states ara similar with the exception that population Is substituted for growth lag In Fonnula B. 2 Formula A usbS the following factors: • population (weighted at 25%); • number of poverty~1eve1 persons (werghted at 50%); and • number of overcrowded housing units (weighted at 25%). Formula B uses; • growth Jag (weighted at 20%); • number of poverty-level persons {weighted at 30%); and • number of pre-1940 housing units (welghted at 50%). HUD computes an allocation amount for every grantee using both formulas; grantees reoaive their funding based on the higher of the two fonnula amounts (after a pro-rata reduction to make the swn of allaDocations equallha appropriation level for the program). Finally, the number of entitlement grantees has inueased by 17 from 2011 to 2012. Thus, not only is there less money In 2012. it must be divided up among mora 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 1he $500,000 participation threshold for the HOME Program. WUI we aUII receive an alloc:atlon? Will we be required to make up the dlfferan~ between our alloeaUon and our formula allocation amount In order to continue to participate In HOME? A: Yes. As long as your jurisdiction received a HOME fonnula grant allocaUon In FV 2011, it wfll receive an FY 2012 allocation even If the aUocalian falls below $500,000. No, your jurisdicti on is not required to make up the difference between yourfonnuta allocatlon and $5 00,00 0. Q: My jurisdlc:tlon•.s FY 2012 HOME aJioc:atlon Is so small that we ara not sure that we can administer the program wllh only 10% program administration allowed under tf)e HOME reguJaUons. If our community decides to decline the FY 2012 HOME allocation, what happens lo 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 allocaUon. 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 lhe community that declined the allocation. but It Is not required to do so. Q: If my Jurisdiction dedlnes Its FY 2012 HOME grant but detannlnes that It would like to resume participation as a HOME PJ at somfl 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 c:ontlnue to qualify as a PJ? A: Aft existi ng 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 formula 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 dedlll8 its allocatlon during tha three-year period of its consortium agreement will conlinue to qualify as a PJ as tong as its HOME consortium agreement has not expired (e.g., the consortium could decline lts allocatio n 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 jurisdfetion's formula allocation dec:raase 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 decraase In the appropriation between 2011 and 2012. The HOME slatula requires HUD to use the most recent available data to run the HOME formula. tn the past, the most recent data used has been the decennial census, which would have been used for the FY 2012 HOME fonnula. 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 anocations. The HOME rormUfa has six factors, which are: 1. Vacancy-adjusted rental units whe!9 the household head is at or bela.v the poverty level. 2. Occupied rental units wilh at least one of four problems (oven:::rowding, Incomplete kitchen facilities, incomplete plumbing, or high rent costs). 3. Rental units built before 1950 occupied by poor households. 4. Rental units described lo #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 fonnula is run each year, data from the American Community Survey ror each PJ is applied to the six fonnula faetors. The first and sixth factors are weighted 0.1; the other rour factOB are weighted 0.2. Since factors 2 through five are doublo-waighted, these factors take on lnC188aed significance In determining each PJ'a formula allocation. The HOME formula's focus on lhe condition of housing and martel conditions makes it very different from the CDBG formula. Q : Wo&.dd my jurisdiction receive more HOME funds ff It formed a consortium with neighboring j urisdictions? A: Forming a consortium with geographlcaDy contiguous units of local government almost always leads to an inaease of funding over the anrent 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 diffiaJrty of administering a program wilh neighboring Jurisdictions fs often underestimated. If your jurisdiction is interested In forming a HOME consortium, the guide to Estab lishing snd Managing s Succsssful HOME Consortium Is prerequisite reading. The guide can be fou nd here: http://www.hud.gov/offices/cpd/affordablehousinqlprograms/home/consortiafl00608 guide.pdf. 4 Participating Agencies December lS, 2011 Page Two COMPARISON OF TERMS IN DETERMINING INCOME LEVELS --Cl>BG SECTIONS PE~CENT QF MEDIAN _ _, Extremely Low-Income Bxtrcmcly Low-Income Equa l to or less titan 30% -' I Low-Income V crt_ Low-Income 31% to 500/o Modcratc-lnalme Low·lo<:ome 51% to 800/q For all agencies utilizing CDBG-approved Public Self-Certification FonnJ, please be sure to incorporate these revised income guidelines into your forms immediately. ShouJd you have any questions, please contact your Program Manager. S~cerely~ L ~~~ Corrununity Development Block: Grant Division TG:AC:AM:LH:vu JC:\CDBO COMMON\Spa:i•l ~alldlnl\lOIIUOiliiiCOIIID pidcUIICI.doc: I ! ~ Jose Pulido, City Manager May 21, 2012 Page Two We recognize that your staff was unable to enter the planning documents for your proposed FY 2012-2013 activities into the CDBG Online System until the agreements for the current year projects were executed in mid-March 2012. The proposed FY 2012-2013 projects for your City were not Included In the County's One-Year Action Plan due to the delays In executing the agreements for your current-year projects and In the submittal of your planning documents for next year. Therefore, we cannot guarantee that you will receive a July 1, 2012 start date for your FY 2012-2013 activities. It is imperative that your CDBG Program receives appropriate management oversight on an ongoing basis to ensure timely initiation and implementation of CDBG-funded activities. To this end, we need to meet to discuss the following: • Your ongoing management oversight of the CDBG grant; • The capacity of your project delivery team, who will be responsible for overseeing and implementing the proposed CDBG-funded construction activity(les); • Your workout plan to meet your FY 2011-2012 drawdown requirement by December 31, 2012;and • Any assistance you may need from us to successfully implement your CDBG-funded activities. In these times of fiscal uncertainty, we must demonstrate the continuing need for funding provided by the CDBG Program. Therefore, by May 25, 2012, please call me at (323) 890- 7150 to schedule the meeting. s~~ , TERRY GONZALEZ, Dirkl Community Development Block Grant Division TG:AC:w K:\CDBG COMMON\TEAMA\Rec;apOefiUrTemple Clty.docx c: Steve Masura, Community Development Director Adam Gulick, Associate Planner