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HomeMy WebLinkAboutAgenda Report - June 18, 2008 K-03AGENDA ITEM Vft'02) CITY OF LODI COUNCIL COMMUNICATION TM AGENDA TITLE: Adopt Resolution Authorizing the City Manager to Notify the U.S. Department of Housing and Urban Development (HUD) and San Joaquin County (SJC) of our Intentto Discontinue Participation in the Urban County for the 2009-2011 period, and our Intentto Receive Community Development Block Grant Funds Directly from HUD as a Metropolitan City. MEETING DATE: June 18,2008 PREPARED BY: Community Development Department RECOMMENDED ACTION: Council adopt Resolution authorizing the City Manager to notify HUD and SJC of our intent to discontinue participation in the Urban County for the 2009-2011 period, and our intent to receive CDBG funds directly from HUD as a metropolitan city. BACKGROUND INFORMATION: Since 1985, the City has entered into a cooperative agreement with SJC to participate in the Urban County, which allows Lodi to receive housing and community development funds through San Joaquin County (SJC), which distributes a portion of its HUD funding each year. The County, using a formula that accounts for population, poverty and the age and condition of the housing stock, determines the amount of funding available for Lodi to use toward projects within its boundaries. The County currently provides approximately $715,000 in CDBG funds and $265,000 in HOME Investment Partnerships Program funds. The County also allows the City to use income gained from previous projects (e.g., housing rehabilitation loan payoffs), known as program income, to fund various programs and projects. Lodi currently meets the population requirement to become a CDBG entitlement entity, and is eligible to receive funding directly from HUD. However, the City is bound to its agreement with SJC during the agreement term, which expires on September 30, 2008. The City can elect not to continue receiving CDBG and HOME funds through the Urban County entitlement for the 2009 federal fiscal year (October 1, 2008 - September 30, 2009). The City is required to notify the County and HUD of its decision to either withdrawal from or remain with the Urban County for FFY 2009 by June 13, 2008. Staff has requested and received a one-week extension to that deadline to allow this to be brought before Council. Lodi would begin receiving CDBG funds as an entitlement on July 1, 2009, if the decision is made to separatefrom the Urban County. In the Shirtsleeve presentation to the Council on June 2, 2008, Staff identified the following three key issues for your consideration before a decision is made whether to separate from the Urban County or not. APPROVED: r- ir , City Manager 1. EFFECT ON OUR CDBG ALLOCATION The formula used by the County in determining our annual allocation as part of the Urban County is the same as that which HUD would use in determining our annual allocation as an entitlement community. Therefore, there would be no reduction in CDBG funds based upon our move from the Urban County. It is likely the City's allocation as an entitlement would be slightly higher, approximately $734,000 annually, because the County would no longer take six percent of the total grant amount for administration. As noted in recent years, there are fluctuations in the annual allocation based upon the Federal budget and the annual allocations to both Urban County jurisdictions and Entitlement communities are subject to those increases/decreases. 2. HOME FUNDS The City does not qualify as a HOME participating jurisdiction, and would not be able to receive HOME funds annually based on a formula allocation. (Based on an estimate of the City's population, poverty levels, and rental housing with significant deficiencies, the City qualifies for approximately $400,000 in HOME funding. The minimum amount needed to qualify for a formula allocation is $500,000.) If the City elects not to renew its agreement with the Urban County, there are two options that the City has for receiving HOMEfunding: Participate in a HOME Consortium with the cities and unincorporated areas of SJC (excluding Stockton). This would be similar to the HOME funding structure that exists currently, but would require that Lodi and SJC agree to participate in the Consortium. 2. Apply to the California Department of Housing and Community Development (HCD) for HOME funding on an annual basis. In the event that the City did not participate in a HOME Consortium, Lodi's preliminary allocation would be transferred to the state, and Lodi would be eligible to apply for the HCD-administered programs. Applicants are evaluated primarily on their capability to implement the program or project (including past experience with similar projects), prior performance with HOME grant reporting, community need, project feasibility, and project readiness. Competition varies from year to year, depending on the amount of funding available and the number of jurisdictions eligible (jurisdictions may not have a large balance of HOME funds from previous grants). Within the past five years, there was at least one round in which all applicants meeting threshold criteria received funding. Currently, 218 communities are eligible to apply for funding. Since 2003, 129 communities have been awarded funding for housing programs or projects (see Attachment A). Typically, award amounts for down -payment assistance or rehab programs are around $600,000 to $800,000, while new construction projects generally are awarded about $1.5 million. In recent discussions with the County, it was fairly clear that they would not be willing to pursue the formation of a Consortium as there is no clear benefit for the County or any of the other participating jurisdictions within the Urban County to go through such an effort. Therefore, it is clear that our only remaining option is to pursue HOME funding through the State HCD Program each year. Through the State Program, Staff believes that we can be competitive in our applications for both housing assistance programs and affordable housing projects, and that there is a greater opportunity for larger funding amounts that will allow us to be more effective at addressing our housing needs. 3. PROGRAM INCOME Lodi has program income from both the CDBG and HOME programs. Currently, as the administering body of each program, SJC retains discretion and responsibility for the use of CDBG and HOME funding, including all program income. The County would continue to collect program income on any program or project funded within Lodi before the City became an entitlement. The County could transfer program income earned from CDBG activities undertaken within city boundaries to Lodi's new entitlement program, although it is not required and the benefit to SJC in doing so is unclear. In our recent discussionswith the County, they are willing to come to an agreement to transfer our program income to us as an entitlement community, providing that we are able to resolve any outstanding reimbursement issues. They seemed very interested, as are we, in maintaining a good working relationship between our two agencies whether we remain in the Urban County or not. SUMMARY Becoming an entitlement would have both benefits and drawbacks for the City. As an entitlement, Lodi would most likely receive a similar amount of CDBG funding, as the County calculates City funding using a formula very similar to the formula HUD uses. Lodi may gain additional freedom in managing and operating its programs, including the ability to fund some programs the SJC has been unwilling to support. The City would be able to allocate the full 20 percent of its grant amount for administration expenses, although there would also be new administrative requirements, such as the production of a five-year plan, annual spending plan, and annual performance report. The City may also incur additional expense in setting up tracking systems, finance procedures, etc. If Lodi becomes an entitlement, the City may see its HOME dollars increase or decrease, depending on a variety of circumstances. It does not appear that the City would lose access to the income potential of its extensive loan portfolio, which provides significant ongoing funding to housing rehabilitation and first-time homebuyer assistance programs. However, it is very apparent that while the City could qualify for larger amounts of HOME funding through the State and the additional funding would allow us to be more effective in addressing our housing needs, the process for obtaining that funding is competitive and there is a risk that in some years we would receive no HOME funding at all. Overall, Staff does recommend that the City pursue entitlement status with HUD for the direct allocation of CDBG funds and that we seek HOME Program funds through the State HCD Program. FISCAL IMPACT: Annual CDBG allocation amounts are not to be affected by the change. A greater percentage of the annual CDBG allocation would be dedicated toward program administration, allowing for the program to be self-sufficient and not require General Fund support. There amount of HOME Program funding would vary from year to year, but there would be no impact on the General Fund. FUNDING AVAILABLE: 2009110,HUD Allocation of CDBG Funds — July 1,2009 , Budget Manager Joseph Comma Attachments cc: Jon Moore, SJC Community Development California Department of Housing and Community Development HOME Program Funding, 2003-2007 Jurisdiction Funding by Year 2003 2004 2005 2006 2007 Amador County $800,000 Anderson $800,000 $2,000,000 Angels Camp $800,000 $800,000 Apple Valley $300,000 $200,000 Arcata $4,500,000 $800,000 Artesia $600,000 Atwater $400,000 $700,000 $800,000 $800,000 Avenal $300,000 $700,000 $800,000 $400,000 $800,000 Biggs $466,500 $600,000 Brawley $3,500,000 $1,500,000 Butte County $600,000 $1,000,000 $1,500,000 Calaveras County $700,000 $800,000 Calexico $600,000 $3,500,000 $1,413,887 $500,000 $800,000 Calimesa $508,400 Calipatria $3,500,000 Calistoga $1,409,852 $3,247,184 Capitola $2,000,000 Ceres $600,000 Chowchilla $500,000 $800,000 Coachella $600,000 $800,000 Colusa $500,000 Colusa County $800,000 Corcoran $600,000 $800,000 Corning $4,000,000 Del Norte County $550,000 $1,625,000 Delano $800,000 $800,000 $800,000 Dinuba $3,500,000 $600,000 $800,000 $800,000 Dixon $400,000 Dorris $410,000 Dos Palos $800,000 EI Centro $400,000 $7,100,000 EI Dorado County $600,000 $3,596,052 Eureka $600,000 Fairfield $650,000 $400,000 $800,000 Farmersville $500,000 $800,000 Firebaugh $997,750 $400,000 $442,236 Fortuna $3,500,000 Gardena $800,000 Glendora $600,000 $2,800,000 $800,000 Glenn County $765,000 Gonzales $600,000 Greenfield $1,500,000 $500,000 $800,000 Hanford $3,740,000 $400,000 $800,000 Hemet $350,000 $4,200,000 Hesperia $600,000 $4,534,000 $4,000,000 Holtville $600,000 Hughson $500,000 Humboldt County $799,931 $4,464,280 $3,925,800 $800,000 Huron $1,000,000 $400,000 $800,000 Attachment A California Department of Housing and Community Development HOME Program Funding, 2003-2007 Jurisdiction Funding by Year 2003 2004 2005 2006 2007 Imperial City $600,000 Imperial County $3,500,000 $3,948,300 $800,000 Inyo County $3,270,000 Ione $500,000 Jackson $800,000 $800,000 $800,000 Kings County $700,000 $800,000 $800,000 La Habra $420,000 $200,000 Lake County $2,717,000 $1,242,080 Lakewood $600,000 Lancaster $3,500,000 $4,000,000 Lincoln $300,000 $600,000 $800,000 Lindsay $400,000 $1,200,000 $1,670,000 $800,000 Livingston $800,000 Live Oak $800,000 Los Banos $400,000 $600,000 $800,000 Madera $800,000 $800,000 Madera County $400,000 $600,000 $800,000 $2,000,000 Mammoth Lakes $3,500,000 $3,500,000 $6,000,000 $400,000 Marysville $600,000 $600,000 Mendocino County $1,483,335 $4,200,000 $568,000 $3,513,603 Merced County $400,000 $600,000 $400,000 $800,000 Mono County $800,000 Montague $205,000 Monterey $246,645 $542,500 $800,000 Monterey County $3,825,500 $2,800,000 $1,100,000 $621,440 $8,000,000 Morro Bay $486,000 Napa $400,000 $800,000 $800,000 Napa County $3,050,000 Nevada County $800,000 $800,000 Newman $700,000 Orange Cove $2,000,000 Orland $1,600,000 $500,000 Oroville $1,000,000 $1,200,000 $1,000,000 $2,800,000 $800,000 Paradise $1,000,000 $800,000 Parlier $800,000 Petaluma $4,000,000 Pico Rivera $600,000 $800,000 Placer County $400,000 $800,000 Plymouth $500,000 Porterville $1,200,000 $1,000,000 $800,000 Red Bluff $974,359 $500,000 Redding $200,000 $120,000 Riverbank $936,850 $800,000 Riverside County $4,000,000 Roseville $600,000 $800,000 $3,491,905 San Benito County $4,000,000 San Juan Capistrano $800,000 $400,000 $800,000 Santa Clarita $600,000 Santa Cruz $200,000 Attachment A California Department of Housing and Community Development HOME Program Funding, 2003-2007 Jurisdiction Funding by Year 2003 2004 2005 2006 2007 Santa Cruz County $5,000,000 Shasta County $600,000 $800,000 $1,680,000 Shasta Lake $800,000 $400,000 $800,000 Simi Valley $600,000 Siskiyou County $410,000 Solano County $2,790,000 $800,000 Soledad $800,000 $3,180,000 $1,700,000 South Lake Tahoe $1,930,297 $3,500,000 $4,000,000 Sutter County $800,000 Sutter Creek $500,000 Taft $1,000,000 Thousand Oaks $250,000 $500,000 Trinity County $600,000 $706,000 $400,000 $800,000 Truckee $3,862,500 $4,000,000 Tulare $400,000 Tulare County $4,510,000 $3,026,154 $2,315,000 Tuolumne County $1,080,000 $700,000 $800,000 $800,000 Upland $800,000 $1,000,000 Vacaville $600,000 $1,000,000 Ventura County $3,500,000 $560,000 Wasco $1,000,000 $800,000 Waterford $3,500,000 Watsonville $600,000 $800,000 West Sacramento $400,000 $600,000 $800,000 $2,200,000 $800,000 Westmorland $300,000 Winters $2,900,280 Woodlake $500,000 $3,229,542 $800,000 Woodland $600,000 $800,000 $4,000,000 $4,000,000 $800,000 Yolo County $2,166,139 $700,000 Yuba City $800,000 $800,000 Yuba County $800,000 $1,500,000 $4,000,000 $1,500,000 TOTAL $48,696,917 $104,001,123 $84,675,589 $67,805,947 $70,744,725 Attachment A RESOLUTION NO. 2008-119 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO NOTIFY THE U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) AND SAN JOAQUIN COUNTY OF THE CITY'S INTENTTO DISCONTINUE PARTICIPATION INTHE URBAN COUNTY FOR THE 2009-2011 PERIOD AND INTENT TO RECEIVE COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS DIRECTLY FROM HUD ASA METROPOLITAN CITY WHEREAS, the City of Lodi has operated under a cooperative agreement with San Joaquin County's Urban County designation, which allows Lodi to receive housing and community development funds from U.S. Department of Housing and Urban Development (HUD) through San Joaquin County; and WHEREAS, the City of Lodi does meet the population requirement as a metropolitan city to qualify to receive Community Development Block Grant (CDBG) funds directly from HUD; and WHEREAS, the City may not void its agreement with San Joaquin County during the agreement term, which expires on September 30, 2008. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lodi does hereby authorize the City Manager to notify HUD and San Joaquin County of the City's intent to discontinue participation in the Urban County for the 2009-2011 period and intent to receive CDBG funds directly from HUD as a metropolitan city. Dated: June 18,2008 hereby certify that Resolution No. 2008-1 IS was passed and adopted by the City Council of the City of Lodi in a regular meeting held June 18, 2008, by the following vote: AYES: COUNCIL MEMBERS — Hansen, Johnson, Katzakian, and Mayor Mounce NOES: COUNCIL MEMBERS — Hitchcock ABSENT: COUNCIL MEMBERS— None ABSTAIN: COUNCIL MEMBERS— None f ' }y1.11/l,�—. -- ?NN"1F"'M--' E .PERRiN ty City Clerk 2008-119 CDBG Entitlement Process Presented by Community Development Department June 18, 2008 CDBG Entitlement Process ■ Lodi currently receives Federal CDBG/HOME Program funding through San Joaquin County (SJC). Li Cooperative Agreement since 1985 ■ As HUD Grantee, SJC oversees administration/grant activities. o Assists with: • Planning and reporting ■ Financial functions • Labor standards compliance • Manages the Housing Assistance Loan Programs CDBG Entitlement Process ■ Lodi is eligible to become an Entitlement community for CDBG funding. o Population over 50,000 ■ Cooperative Agreement expires September 30, 2008. ■ Opportunity to either stay with Urban County or withdraw and pursue Entitlement status. ■ Number of considerations when making the determination. Lj Effect on CDBG allocation amount. Li Effect on HOME Program funding. u Effect on Program Income. slues to Consider — CD BG Funds ■ Effect on CDBG allocation amount. o Likely to receive the same or slightly larger annual CDBG allocation. ■ Estimate $734,000 Additional workload. ■ New Administrative Responsibilities ❑ Five -Year Plan, Annual Spending Plan, Annual Performance Report ❑ Reports we now do to SJC, will be directly to HUD. ■ Additional Program Admin funding. slues to Consider — H OM E Funds ■ Effect on HOME Program funding. Lodi does not qualify as an Entitlement for HOME Program funds. Apply to State of California Housing and Community Development HOME Program. ■ Will provide access to more funding for programs and services. ❑ Funding request for Housing Assistance Funds ($600,000 - $800,000) ❑ Funding request for specific affordable housing projects. (up to $5,000,000) ■ Competitive application process. slues to Consider — Program I ncome ■ Effect on Program Income Li SJC would continue to collect program income from both CDBG and HOME Programs. Li SJC willing to come to an agreement regarding the transfer of Lodi's program income from the Urban County to the new entitlement. Majority of our program income is already committed to the Railroad Avenue Housing Project. ■ Current loan portfolio of $3.1 Million ■ Late 2008 o Begin meetings with HUD on Entitlement process. ■ January -March 2009 Begin Consolidated Plan and 5 -Year Action Plan Process ■ Public input on funding priorities. ■ Council approval of draft Citizen Participation Plan. Lj Open application process. ■ April -June 2009 o Public comment period for Draft Consolidated Plan/Action Plan. o Council approves Consolidated Plan/Action Plan ■ July 1, 2009 o CDBG Funds Available for 2009/2010 Program Year ■ August 2009 u Apply for State HOME Program funding. ■ July 1, 2010 Ej Goal for close-out of all CDBG activities funded by SJC. Steff Presentation Complete ■ Questions?