20060502_m



COUNTY OF SAN MATEO Inter-Departmental Correspondence
Department of Housing

DATE:						April 20, 2006
BOARD MEETING DATE:						May 2, 2006
SPECIAL NOTICE/HEARING						10-Day Publication, Public Hearing
VOTE REQUIRED						Majority

TO:				Honorable Board of Supervisors
FROM:				Duane Bay, Director, Department of Housing
SUBJECT:				FY 2006-2007 Annual Action Plan for the Use of Federal Funds under three Programs: CDBG, ESG, and HOME

Recommendation
A.		Conduct a public hearing; and

B.	Adopt a resolution authorizing:

	1.		Approval of the FY 2006-2007 Annual Action Plan for the use of federal funds provided under three entitlement programs: Community Development Block Grant; Emergency Shelter Grant; and HOME Investment Partnerships; and

	2.		The submission of the Action Plan and required certifications to the U.S. Department of Housing and Urban Development (HUD).

Vision Alignment
Commitments: Ensure basic health and safety for all; Offer a full range of housing choices. Goals 8 and 9: Help vulnerable people – the aged, disabled, mentally ill, at-risk youth and others – achieve a better quality of life; and Housing exists for people at all income levels and for all generations of families.

The action contributes to these commitments in that the programs and projects recommended for funding in the Action Plan will improve the quality of life for county residents, particularly those with the least resources, by offering them access to quality affordable housing, enhanced community facilities, and meaningful programs that effectively address residents’ issues that impede them from fuller participation in prosperity-building activities in the county.

Performance Measures:
Measure				FY 2005-06 Actual		FY 2006-07 Projected
Number of Projects/Programs Assisted				39		39

Background
HUD provides annual funding allocations to the County under three programs: Community Development Block Grant (CDBG); HOME Investment Partnerships (HOME); and Emergency Shelter Grant (ESG). In terms of CDBG, 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 receive 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 members of the HOME Consortium, the Cities of Daly City, San Mateo, and Redwood City now each receive their own HOME allocations. Regarding ESG funds, the County is the sole recipient 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 three HCDC subcommittees, each of which 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, 2006.

Discussion Dwindling HUD Funding On the heels of several years of HUD cuts, the County is braced for yet additional cuts. For CDBG, the cut will be the steepest in a decade – at over 10% from the previous year. HOME will sustain a cut of almost 6%, and ESG will see its funding pared, though minimally, at just under 1%. In terms of absolute dollars, CDBG and HOME comprise 97% of the County’s HUD allocation, with ESG constituting a mere 3%. Program Budget The total FY 2006-2007 Action Plan budget, including loan repayments and reprogrammed funds, is $6.9 million, a reduction of almost 9% from the current year’s budget. The new HUD allocation includes a special HOME set-aside of some $30,500 for the American Dream Downpayment Initiative (ADDI), financial assistance to low-income homebuyers. This is the third and smallest ADDI set-aside of a three-year HUD effort.
The FY 2006-2007 budget is summarized below under Total Sources, with allocations for specific categories under Total Uses.
SOURCES
CDBG Grant					$2,927,689
HOME Grant					$1,675,735
ESG Grant					$ 125,439
HOME ADDI					$ 30,589
CDBG Reprogrammed					$ 405,131
HOME Reprogrammed					$ 695,959
CDBG Program Income (loan repayments)					$1,054,142
HOME Program Income (loan repayments)					$ 55,153
TOTAL SOURCES					$ 6,969,837

USES
Housing Devt/ Housing Minor Rehab Prgs/ ADDI					$2,918,155		41.9%
SMC and City of Menlo Park Housing Rehab Programs					$1,529,911		22.0%
Public Facilities (incl. Safe Harbor)/ Micro-Enterprise Asst.					$ 699,525		10.0%
Public Services/ Emerg. Shelter Operations					$ 558,320		8.0%
HUD Mandate: Fair Housing					$ 41,200		0.6%
Section 108 Loan Repayment					$ 246,998		3.5%
Program Mgmt & Adm.					$ 975,728		14.0%
TOTAL USES					$6,969,837		100.0%

Funding 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. The HCDC and staff funding recommendations are in concurrence.

On March 22, 2006, after three subcommittee hearings held the prior week, the HCDC convened to review and ratify the Action Plan for Board of Supervisors’ approval. Attachment A is the proposed Action Plan, highlighted below:

The overarching importance of affordable housing development is acknowledged. Almost 64% ($4.4 million) of the budget will be expended for both 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 again proposed – one targeting housing development requests during the year, and another pool for requests for the improvement or development of community facilities. These reserve funds will allow 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% ($558,320) 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 as noted earlier, the County’s ESG allocation has always been modest ($125,000+) in relation to CDBG and HOME. HOME funds cannot be used for this category.

• Public Service applications were reviewed against Board-established priorities of emergency shelter and transitional housing operations; safety-net provider agencies; and other services that keep people in their homes.

• Three public service programs requesting funds via the NOFA process have traditionally been approved for funds through the Human Service Agency’s CalWorks budget. These programs are: #31, Interfaith Hospitality Network’s Family Shelter Program; and #36 and 37, Second Harvest Food Bank’s two food provision programs. (See attached Table A.) For the past several years, these three programs applied through the NOFA process to secure a place in the HSA budget process. Even though the Housing function is now separate from Human Services, HSA is staffing the Public Services component of the NOFA process. But to ensure that these three programs receive continued funding, the HCDC voted officially to endorse these programs for other-than-CDBG funding, as these programs are seen as vital to assisting residents marginalized by poverty. A letter from the chair of the HCDC has been mailed to the President of the Board in advance of today’s public hearing.

• The above HCDC letter also supports a fourth program, a new application not recommended for CDBG funding as it does not meet the narrow and very specific funding priorities under Public Services. This program, #43, the Sponsored Employment Project, administered by El Concilio and One East Palo Alto, provides underserved youth with employment opportunities. This program is seen as important to enabling a vulnerable population to more fully participate in activities contributing to the county’s prosperity.

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.

County Counsel Review
County Counsel has reviewed and approved the Resolution

Fiscal Impact
The Action Plan is included in the Department of Housing Budget for FY 2006-07. There is no net County cost.