COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Housing

 

DATE:

April 20, 2005

BOARD MEETING DATE:

May 3, 2005

SPECIAL NOTICE/HEARING:

10-Day Publication, Public Hearing

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

Maureen Borland, Interim Acting Director, Department of Housing

Steve Cervantes, Director, Office of Housing

   

SUBJECT:

FY 2005-06 Annual Action Plan for the Use of Federal Funds under three programs: CDBG, ESG, and HOME Investment Partnerships Act; and the Fair Housing Action Plan

 

RECOMMENDATION:

1.

Conduct a public hearing; and

2.

Adopt a resolution authorizing:

 

A.

Approval of the FY 2005-06 Annual Action Plan for the use of federal funds provided under three entitlement programs: CDBG, ESG, and HOME; and

 

B.

Approval of the Fair Housing Action Plan and the submission of required certifications to the United States Department of Housing and Urban Development.

 

VISION ALIGNMENT:

Commitment: Realize the potential of our diverse population; and Ensure basic health and safety for all.

 

Goals: 1 and 8: Our diverse population works well together to build strong communities, effective government and a prosperous economy; and Help vulnerable people – the aged, disabled, mentally ill, at-risk youth and others – achieve a better quality of life.

Both the Annual Action Plan and the Fair Housing Action Plan are the culmination of an extensive community collaborative process involving residents, community-based organizations, and City and County agencies. The ultimate goals, objectives and outcomes of the two Plans deal with improving the quality of life of County residents, particularly those with the least resources, by opening access to quality affordable housing, enhanced community facilities, and meaningful programs that effectively address residents’ needs.

 

Performance Measure(s):

Measure

FY 2004-05
Actual

FY 2005-06
Projected*

# of Projects/Programs Assisted

47

39

    Fewer activities will be funded in FY 2005-06 due to drop in anticipated HUD funding, which has discouraged some applicants from applying.

BACKGROUND:

The U.S. Department of Housing and Urban Development (HUD) provides annual funding allocations to the County under three entitlement programs: Community Development Block Grant (CDBG), HOME Investment Partnerships Act (HOME), and Emergency Shelter Grant (ESG).

In terms of the CDBG Program, the funds are provided to the County on behalf of itself and the 16 small cities. These 17 jurisdictions comprise the Urban County. The four largest cities – Daly City, South San Francisco, San Mateo, and Redwood City - each receives a separate CDBG entitlement from HUD.

HOME funds are received by the County as a HOME Consortium, which consists of the Urban County and the City of South San Francisco. Once belonging to the HOME Consortium, the Cities of Daly City, San Mateo, and Redwood City now each receive their own allocation of HOME dollars. The County is the sole recipient of ESG funds for countywide distribution.

The three HUD programs require a locally-defined public participation process for the distribution of funds. Starting with an annual priorities-setting community meeting, followed by the issuance of a Notice of Funding Availability and a formal application process, the County’s public process is facilitated by a 15-member Housing and Community Development Committee (HCDC). Staff coordinates the public process and formulates preliminary recommendations to the HCDC. Through the three HCDC subcommittees, which each presides over a public hearing with the applicants, Staff’s recommendations may be re-adjusted for Board of Supervisors’ review and approval. The final piece of the public process is the public hearing held by the Board, after which the Action Plan is finalized for submission to HUD, due no later than May 15, 2005.

 

DISCUSSION:

Dwindling HUD Funding
For the past several years, the County has been impacted by decreasing HUD allocations, especially in the CDBG Program. A decade ago, the County experienced an actual dollar drop in annual CDBG funding of 16.25% (from $3.8 million to $3.2 million). In that same period, the County enjoyed negligible net increases of 1.3% and 2.3%, respectively, in ESG and HOME. The bottom line is that the funding has not kept pace with the cost of living, much less the County’s housing and community development needs. Against this backdrop, the County expects a 5.75% reduction in CDBG funding for the upcoming fiscal year.

Program Budget

The total FY 2005-06 budget is $7.6 million, including loan repayments and reprogrammed funds. (For comparison, the County’s budget ten years ago in FY 1995-96, was $7.5 million.) The new HUD allocation includes a special set-aside of $61,302 under the HOME American Dream Downpayment Initiative (ADDI), financial assistance to low-income homebuyers. This is the second ADDI set-aside of a three-year HUD effort.

The FY 2005-06 budget is summarized below under Total Sources, with allocations for specific categories under Total Uses:


TOTAL SOURCES

 

CDBG Grant

3,261,347

HOME Grant

1,781,899

ESG Grant

126,548

HOME ADDI

61,302

CDBG Reprogrammed

357,016

HOME Reprogrammed

698,500

CDBG Program Income (Loan Repayments)

1,337,615

TOTAL SOURCES

$7,624,227

TOTAL USES

 

Percent

Housing Devt/ Housing Rehab Prgs/ADDI

3,976,909

52.2%

Public Facil./ Micro-Ent. Asst.(incl. Safe Harbor)

552,970

7.3%

Public Services/ Emerg. Shelter Operations

609,423

8.0%

HUD Mandate: Fair Housing

43,000

0.6%

Co. of San Mateo & City of Menlo Park Housing Rehab Prgs

1,100,000

14.4%

Section 108 Loan Repayment

237,615

3.1%

Program Mgmt & Adm.

1,104,310

14.5%

TOTAL USES

7,624,227

100.0%

Staff Recommendations
As noted earlier, the public process involves Staff making preliminary recommendations to the HCDC, which in turn may either re-affirm or modify the recommendation for Board review and approval. Staff recommendations to the HCDC for funding each proposed project are noted in Attachment A. Many recommendations appear to differ from the HCDC’s. While Staff is in general agreement with the HCDC recommendations, the initial differences arose from the fact that many project sponsors provided additional substantive information after Staff had formulated its recommendations. In the Public Services category (Projects #24 through #44), Staff imposed even across-the-board 5.75% reductions for most ongoing programs. This reduction is commensurate with the anticipated CDBG allocation from HUD. Since two programs did not re-apply for funds in this funding cycle, a new program that meets funding priorities was proposed for funding (#42 The Lesley Foundation’s Senior Services Coordinator); and (#40 Shelter Network), the County’s largest homeless provider, was proposed for a shallower cut than the other programs.

HCDC Recommendations

On March 24, 2005, after three subcommittee hearings held the prior week, the HCDC convened to review and ratify the Action Plan for Board of Supervisors’ approval. The HCDC recommendations are summarized on Attachment A and highlighted below:

§ The overarching importance of affordable housing development is acknowledged. Over 52% ($3.9 million) of the budget will be expended for increasing the affordable housing supply and improvement of existing housing. While HOME funds must be allocated for housing activities, the HCDC has continued the practice of setting aside at least 45% of new CDBG funds for various housing activities.

§ Two reserve funds are proposed – one targeting housing development requests during the year, and a new off-cycle pool for requests for the improvement or development of community facilities. These reserve funds will enable applicants to request funds outside the narrow application window, open from mid-December to mid-January of each year.

§ The category of Public Services, which includes Emergency Shelter Operations, has always been small, this year comprising 8% ($609,423) of the budget. Funding for this category is limited under CDBG Program rules to 15% of the annual CDBG Grant. ESG funds augment this category, but the County’s ESG allocation has always been small (approximately $125,000) in relation to CDBG and HOME. HOME funds cannot be used for this category.

§ Under Public Services, two funding options are proposed – Plan A and Plan B, with Plan A the preferred scenario. Plan A is based on the presumption that the Board will have sufficient General Funds to fund the Core Agencies. Hence under Plan A, no CDBG funds are recommended for the Core Agencies, while the other on-going programs would receive current level funding. Plan B is proposed as the alternative only if the Board cannot fund the Core Agencies. Plan B provides funding to the Core Agencies and the on-going programs - at a reduction from the current year’s level.

    The HCDC rationale for Plan A is based on the fact that historically the Core Agencies were funded by General Funds. Because of the County’s fiscal situation in the last two years, County support for these agencies was directed to the Human Services Agency for supplementary funding under CDBG. The HCDC strongly believes the County’s fiscal situation is in better shape to support the Core Agencies again.

    Under this funding cycle, four of the six Core Agencies applied for funding of $15,000 each, for a total request of $60,000. See attached Table A projects #25 Fair Oaks Community Center; #33 North Peninsula Neighborhood Services; #35 Samaritan House; and #43 Pacifica Resource Center. The other two Core Agencies, Coastside Opportunity Center and the Daly City Community Center, were not applicants for CDBG funds this year.

    Plan A is preferred for the following reasons. By not funding the Core Agencies, the net dollar impact of $57,440, which would have been used to fund them under Plan B, will yield tremendous economic impact:
    (1) Community-based organizations tend to deliver much needed services to County residents at cost-effective rates, and should, at the minimum, be maintained at current levels if cost-of-living increases cannot be offered; and (2) Three new requests would be granted funding – two Free-at-Last residential treatment programs in East Palo Alto; and a senior social services program at Lesley Gardens Sr. Housing in Half Moon Bay. In summary, it is felt that the County’s opportunity costs on the General Fund of $57,440 would translate into a direct economic benefit to 13 other programs.

Fair Housing Action Plan

The attached Fair Housing Action Plan is the product of a countywide public process which began with the preparation of an Analysis of Impediments to Fair Housing Choice (AI), completed July 2004. Required by HUD, the County’s AI was undertaken as a regional effort involving all five CDBG entitlement jurisdictions in the County, including Daly City, South San Francisco, San Mateo, and Redwood City. Each entitlement jurisdiction is required to develop its own Fair Housing Action Plan to guide local efforts to ensure fair housing.

The County’s Plan was developed out of two public meetings held in June and November 2004. The Action Plan calls for: (1) supporting local efforts to combat NIMBYism for proposed housing developments utilizing smart growth principles; and (2) proposes improvements to enhance landlord/tenant education; efforts to ensure that housing meets the needs of the disabled; and other improvements in the areas of transportation, lending practices, and the performance of fair housing enforcement agencies.

HUD Certifications

In order to receive CDBG, HOME, and ESG funds, the County must submit pro-forma certifications to HUD assuring the County: (1) will not discriminate in providing services; (2) is following a citizens participation process delineated in a public input plan; (3) is providing a drug-free workplace for staff; and (4) has adopted and is enforcing a policy prohibiting the excessive use of force against any individuals engaged in non-violent civil rights demonstrations. In approving the Annual Action Plan, the Board is, therefore, asked to approve the aforementioned certifications.

FISCAL IMPACT

Funding will be provided under the Department of Housing’s FY 2005-06 Budget of $7,624,227 for CDBG, ESG, and HOME funds. Under the preferred Plan A, there is a Net County Cost of $57,440, to be incurred by the Human Services Agency, which will be responsible for administering the funding contracts for the affected agencies receiving General Funds. Each project or program in the Action Plan will be individually approved for funding at a later date under a separate funding agreement.

Under Plan B there is no Net County Cost.