COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Department of Housing

DATE:

May 2, 2011

BOARD MEETING DATE:

May 10, 2011

SPECIAL NOTICE/HEARING:

10 Day Publication, Public Hearing

VOTE REQUIRED:

Majority

TO:

Honorable Board of Supervisors

FROM:

Duane Bay, Department of Housing Director

SUBJECT:

Approval of the FY 2011-2012 Annual Action Plan for the use of Federal Funds

RECOMMENDATION:

Adopt a Resolution:

A.

Approving the FY 2011-2012 Annual Action Plan for the use of Federal Funds provided under three entitlement programs: Community Development Block Grant (CDBG), Emergency Shelter Grant (ESG), and HOME Investment Partnerships (HOME); and

B.

Authorizing the Director of the Department of Housing to submit the Annual Action Plan and required certifications to the U.S. Department of Housing and Urban Development (HUD); and

C.

Authorizing the Director of the Department of Housing or the Director’s designee to execute contract amendments that modify the contract term and/or services so long as the modified term or services do not exceed the total annual HUD funding allocations.

Background

HUD provides annual funding allocations to the County under programs including Community Development Block Grant (CDBG); HOME Investment Partnerships (HOME); and Emergency Shelter Grant (ESG). With regard to CDBG, the funds are provided to the County in its definition as an Urban County representing 16 “non-entitlement” towns and cities (Atherton, Belmont, Brisbane, Burlingame, Colma, East Palo Alto, Foster City, Half Moon Bay, Hillsborough, Menlo Park, Millbrae, Pacifica, Portola Valley, San Bruno, San Carlos and Woodside) and all unincorporated areas of San Mateo County. The four largest cities in San Mateo County (Daly City, South San Francisco, San Mateo, and Redwood City) meet HUD’s definition of being “entitlement” cities, and each receive their own separate CDBG grant 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, which is an entitlement city and could receive its own HOME allocation but has chosen to remain with the Urban County in the HOME Consortium.  The other three entitlement cities opted out of the HOME Consortium several years ago and each receive their own separate HOME allocation.

The County is the sole recipient from HUD for countywide distribution of ESG funds.

The three HUD programs require a locally-defined public participation process for the distribution of funds. The County’s public process starts with an annual priorities-setting community meeting in the Fall, followed by the issuance of a Notice of Funding Availability (NOFA), and a formal application process. The County’s public process is facilitated by the Housing and Community Development Committee (HCDC). Staff reviews all applications, forms preliminary recommendations which are then discussed with the HCDC at an Application Study Session. Questions raised by the HCDC are relayed by staff to the applicants. The HCDC then conducts a public hearing at which each applicant is given an opportunity to make a brief presentation and answer questions raised by the HCDC. The HCDC then formulates its recommendation, which may concur with staff recommendations or diverge. These recommendations are posted on the Internet for a 30-day public review. The final step of the public process is the public hearing held by the Board of Supervisors, after which the Action Plan is finalized for submission to HUD, due no later than May 15 of each year.

The NOFA budget is based on a preliminary notice of federal annual allocations plus projections of program income from revolving loan payments and payoffs. Because the public participation process must start before the federal notice arrives, staff typically uses the previous fiscal year’s funding allocation as a placeholder. This year however, base on the initial federal Continuing Resolution, staff assumed a 9% reduction in federal funding. The budget that is included in the Annual Action Plan now before the Board reflects a 16% reduction, based on the more recent Continuing Resolution.

Discussion

Throughout the years HUD funding to the County has been diminishing gradually even though project costs and community needs continues to rise. For FY 2011-2012, CDBG funding is expected to decrease about 16% from the previous year’s allocation.

HOME funds are expected to decrease by 12% relative to last year. ESG funding has generally stayed constant within the last 7 years, but is expected to increase by about 40% for FY 2011-12, to $172,000.

The allocation recommendations were based on an assumption of a 9% funding reduction, and the likely reduction now appears to be substantially larger (16% CDBG, 12% HOME). Nonetheless, in light of some variability in projected program income, staff recommends that the Board approve the allocations to non-profits as recommended by the HCDC.

Approval of the FY 2011-2012 Annual Action Plan contributes to the Shared Vision 2025 outcome of a Livable Community by addressing health and safety hazards including, but not limited to, improving handicap accessibility, addressing housing code deficiencies and rehabilitating existing housing stock in San Mateo County.

As noted earlier, the public participation process involves staff making preliminary recommendations to the HCDC, which in turn, may either reaffirm or modify the recommendations for Board consideration. On March 17, 2011, after the HCDC held and closed the public hearing, the HCDC convened to review and ratify the funding recommendations for Board of Supervisors’ approval. Attachment A shows the proposed Action Plan, summarized below.

Two minor adjustments to the allocation process are noteworthy. First, the Department of Housing has established a target minimum allocation of $25,000. Each contract imposes a substantial paperwork load on both the non-profit recipient and the County staff. As a general rule, contracts for small amounts tend not to result in a service impacts commensurate with the paperwork necessary for federal compliance. The HCDC did make a few recommendations below this minimum allocation level. Second, Department staff recommended that CDBG Public Service funds going to the core service agencies or to homeless shelter operators be administratively consolidated with similar, larger grants from Human Service Agency to the same set of recipients for the same services. The HCDC concurred for the core service agencies and a consolidated grant of $120,000 is included in the recommended Annual Action Plan. The HCDC also supported consolidation of grants to shelter operators in concept, but recommended that implementation be put off until next year to allow more time for planning.

Action Plan Budget
The total FY 2011-2012 Action Plan budget, including income from annual federal grants, repayments and reprogrammed funds, is approximately $7.6 million. The table below summarizes projected HUD funding under CDBG, HOME and ESG.

TOTAL SOURCES

CDBG Grant

$ 2,563,648

HOME Grant

$ 1,595,944

ESG Grant

$ 172,836

CDBG Reprogrammed

$ 88,836

HOME Reprogrammed

$ 415,227

CDBG Program Income (Loan Repayments)

CDBG Rehab Program Income (Loan Repayments)

$ 755,737

$889,693

HOME Program Income (Loan Repayments)

$ 1,176,715

TOTAL SOURCES

$ 7,658,636

TOTAL USES

Housing Development – CDBG

$ 1,514,182

19.8%

Housing Development – HOME

$ 2,256,002

29.5%

Community Housing Development (CHDO)

$ 430,000

5.6%

Section 108 Trestle Glen Loan Payment

$ 638,610

8.3%

Non-Profit Minor Home Rehab Programs

$ 342,500

4.5%

Public Facilities Rehabilitation

$ 128,389

1.7%

Public Services – Core Service Agencies

$ 120,000

1.6%

Public Services – Emergency Shelter

$ 329,602

4.3%

Public Services – All Other

$ 187,500

2.4%

Public Services – Fair Housing

$ 25,000

0.3%

Micro-Enterprise/Economic Development

$ 43,144

0.6%

County Housing Rehab Program

$ 184,602

2.4%

CHDO allocation to reserves

$224,619

2.9%

Project Delivery Costs

$106,783

1.4%

Program Management

$ 1,127,723

14.7%

TOTAL USES

$ 7,658,636

100%

HUD Certifications:

In order to receive CDBG, HOME, and ESG funds, the County must submit pro forma certifications to HUD assuring that 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 as well.

County Counsel Review

County Counsel has reviewed and approved the Resolution.

Fiscal Impact

The Annual Action Plan projects are included in the Department of Housing Budget for FY 2011-12. There is no Net County Cost.