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
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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
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January 17, 2012
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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
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!
~
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
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c: Steve Masura, Community Development Director
Adam Gulick, Associate Planner