Visalia City Council - File #: 24-0066

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Agenda Item Wording:

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Review 2024 Annual Action Plan - Review and comment on the proposed use of U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) and HOME Investment Partnership Program (HOME) for the Program Year (PY) 2024 Annual Action Plan, and the 2019 CDBG CARES Act (CDBG-CV) Annual Action Plan Amendment IV.

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Deadline for Action: 4/1/2024

Submitting Department: Finance and Technology Services

Contact Name and Phone Number: Margie Perez, Housing Specialist, margie.perez@visalia.city <mailto:margie.perez@visalia.city>, (559) 713-4460; Melody Murch, Assistant Finance Director, melody.murch@visalia.city <mailto:melody.murch@visalia.city>, (559) 713-4379; Renee Nagel, Finance Director, renee.nagel@visalia.city <mailto:renee.nagel@visalia.city>, (559) 713-4375

Department Recommendation:

That Council review and comment on the Draft CDBG and HOME priorities and allocation of resources included in the Draft Program Year 2024 CDBG and HOME Annual Action Plan and the 2019 CDBG-CV Annual Action Plan Amendment IV, and receive public comment.

Background Discussion:

As an entitlement community (EC) for CDBG and a participating jurisdiction (PJ) for HOME, the City of Visalia receives annual federal formula grants through HUD. This provides the City with annual direct grant funding primarily for the benefit of low-income persons and households. As required by HUD, the City develops a 5-year Strategic Plan based on a Community Needs Assessment which is reviewed and approved by Council during the development of the Consolidated Plan (ConPlan). As also required by HUD, the City develops an Annual Action Plan each year for the purpose of implementing the activities included in the ConPlan. The Program Year (PY) 2024 Annual Action Plan is the fifth year of the current 5-year ConPlan, and the plan objectives have been produced based upon those established in the City’s 5-year Strategic Plan.

Staff is seeking direction from the City Council on the priorities and activity allocations proposed for the 5^th year of the current 5-year Consolidated Plan (ConPlan) in the PY 2024 (Fiscal Year 2024-2025) Annual Action Plan. The proposed programs for the draft PY 2024 Annual Action Plan were formulated based upon applications received in response to a Notice of Funding Availability (NOFA) released by the City to seek applications for the available funding. At this time, Council can change the draft PY 2024 Annual Action Plan; however, significant changes would require an amendment to the current 5-year ConPlan that will end on June 30, 2025. At this time, staff recommends focusing on establishing new activities to be included in the next 5-year ConPlan which is currently in the planning phase and will come to Council for adoption in April of 2025.

Once public comment and Council direction has been received, staff will incorporate any changes directed by Council and return with the final PY 2024 Annual Action Plan on April 15, 2024, to hold a public hearing for adoption. The final plan and amendments will include any comments provided by Council today, those received during the Citizens Advisory Committee (CAC) on April 3, 2024, and all public comments received during the 30-day public comment period beginning on March 15, 2024, through April 15, 2024. The adopted PY 2024 Annual Action Plan must be submitted to HUD by May 15, 2024.

PY 2024 Proposed Annual Action Plan: The proposed PY 2024 Annual Action Plan consists of an estimated $1,300,000 in CDBG projected resources, and $1,065,000 in HOME projected resources. The PY 2024 proposed CDBG and HOME resources, activities, and funding allocations are explained in further detail below.

PY 2024 Proposed Community Development Block Grant (CDBG) Resources and Expenses:

The PY 2024 CDBG resources consists of $1,200,000 in estimated annual grant allocation, and $100,000 in estimated program income for a total of $1,300,000 in PY 2024 CDBG resources as identified in Table 1: 2024 CDBG Projected Resources. *CDBG program income is generated from repayments of CDBG funded first-time homebuyer and owner-occupied rehabilitation loans.

The proposed programs for the PY 2024 Action Plan were formulated based upon applications received in response to a Notice of Funding Availability (NOFA). A NOFA was released to allow all interested parties to apply for available funding to administer programs in accordance with the City’s 5-year ConPlan goals and priorities approved by Council on April 20, 2020. The City released a NOFA from January 3^rd, 2024, through February 15^th, 2024, to solicit applications for the administration of the City’s PY 2024 CDBG public services, emergency accessibility home repair program, and senior/disabled mobile home repair program. The NOFA was published in the Visalia Times Delta on 1/3/24 and 1/10/24. The NOFA was posted on the City’s purchasing website, on the Central Valley Purchasing System “BidNet”, and on the Kings/Tulare Homeless Alliance listserv on 1/12/24 and 2/2/24, which has over 400 recipients.

CDBG NOFA Committee Recommended 2024 Annual Action Plan Activities

The proposed 2024 Annual Action Plan activities and their respective funding are summarized in Attachment B. Staff requests that Council comment, discuss, and direct any requested changes to the proposed project and program allocations. The 2024 CDBG administration and planning budget is $260,000, which is 20% of the 2024 grant allocation and program income. The administration budget will pay for staffing, operating, and the cost of consulting services to develop the next Consolidated Plan.

CDBG federal regulations restrict public services to 15%. This means that $240,000 is available, in total, from the 2024 grant allocation and prior year program income. Funding requests received for the $240,000 of Public Services funding totaled over $500,000, which is twice the funding available. All requests were reviewed by a committee that consisted of three City employees.

The Committee funding recommendations are based upon the priorities set by the current ConPlan and intended to provide funding where it will be most impactful. Priority is recommended for programs that directly fund housing placements for homeless individuals through the provision of rent, vouchers, or the operation of housing units. The NOFA also imposed the limitation of program administration (staffing, operating, etc.) to 25% of total program budgets. To distribute the available funding, some applications have been partially funded, and two have not been recommended for funding, as shown in Table 2: PY 2024 CDBG Proposed Public Services. As a result of the release of the CDBG NOFA, the City received the following applications:

• Kings/Tulare Homeless Alliance (KTHA): Requested $20,000 and the NOFA committee recommends $20,000.

o KTHA is the designated Continuum of Care (CoC) for our region. The CoC is recommended by HUD as a comprehensive approach and to promote communitywide cooperation to ending homelessness. As the designated CoC, KTHA oversees the Point in Time (PIT) Count. KTHA oversees the administration of HUD funded Permanent Supportive Housing (PSH) and Rapid Rehousing (RRH) programs, as well as the Coordinated Entry System (CES) which begins the process of housing placement. KTHA also operates the Visalia weekly Local Initiatives Navigation Center (LINC) at the Visalia Rescue Mission to promote services including mental health assessments/enrollments, document readiness, mainstream benefit enrollment, social security advocacy, substance abuse program enrollments, veteran services, clothing assistance, and food assistance.

• Family Services of Tulare County (FSTC): Requested $50,000 and the NOFA committee recommends $50,000.

o FSTC administers a HUD CoC Permanent Supportive Housing (PSH) rental voucher programs that require a 25% match to secure funding. These CDBG funds will be used as a required match to secure PSH rental vouchers for chronically homeless individuals residing in Visalia. FSTC also provides ongoing case management and support services to chronically homeless persons already housed in Visalia who are currently receiving a PSH voucher. If PSH match is not secured, these currently housed chronically homeless individuals could return to living in the streets in Visalia.

• Kings View PATH Program (PATH): Requested $50,000 and the NOFA committee recommends $20,000.

o PATH will provide Housing Flex Funds as direct client assistance which includes security deposits, rental application fees, utility deposits, motel vouchers, legal document fees, and emergency rental assistance to prevent evictions. Direct outreach services also include case management, transportation assistance, legal document assistance, linkage to employment services, and completion of the VI-SPDAT assessment to begin permanent housing placement. In addition, 90% of Kings View PATH CDBG funds go directly to client assistance. Kings View does an excellent job in leveraging other funding sources to cover salaries and administrative costs.

• United Way of Tulare County (UWTC): Requested $180,000 and the NOFA Committee recommends $0.

o UWTC will provide homeless prevention services that includes emergency rental and/or utility assistance to prevent an eviction or utility service cutoff for low-and moderate-income households experiencing an economic hardship.

o The NOFA committee does not recommend awarding homeless prevention programs at this time, because priority is recommended for programs which provide housing for individuals currently experiencing homelessness. In addition, $291,599 in CDBG-CV funds were provided for rental/mortgage assistance for the period of January 1, 2023, and December 31, 2023.

• Salt + Light (SL): Requested $76,000 and the NOFA committee recommends $0.

o SL Everyone Eats Food Truck Program will provide food assistance and street case management services to people experiencing homelessness. The food truck is how SL has cultivated trust and community with neighbor’s experiencing homelessness, laying the foundation for relationship-based care and services, and it serves as the gateway to housing because from these touch points. Neighbors are then referred to case management services and social enterprise services.

o The NOFA committee does not recommend awarding this program because it does not create or fund housing as discussed above, and 72% of the overall program funding is spent on administration, which exceeds the standard set by the NOFA. Consideration was given to partially fund this program but given that other housing projects were not funded recently by another funding source, the committee is recommending focusing on housing programs.

• Elevate Community Services (Elevate): Requested $72,610 and the NOFA Committee recommends $25,000.

o Elevate requires match funding to secure 22-units of HUD CoC permanent supportive housing (PSH) vouchers for Fiscal Year (FY) 2024/25 for the Majestic Gardens. The Homekey contract agreement has been executed and project completion is expected in September 2024. As a result, rental assistance and PSH match is needed in FY 2024/25. If PSH match is not secured in FY 2024/25, 22 PSH vouchers will be lost for the project and the region as they will be returned to HUD. Funding opportunities for FY 2024/25 are very limited to meet the PSH match requirement for the next fiscal year. CDBG funds will also be used to provide on-site case management and supportive services to tenants to ensure housing stability.

• Self-Help Enterprises (SHE) Eden House: Requested $75,000 and the NOFA committee recommends $125,000.

o SHE is requesting operational funding for Eden House, a transitional - bridge housing project for people experiencing homelessness awaiting a permanent housing unit. Operational expenses include a housing specialist to place clients into permanent housing as well as client meal assistance for 15 Visalia-designated beds. Eden House currently receives 15% of the city annual Permanent Local Housing Allocation (PLHA) annual allocation. However, in FY 2023/24, PLHA funds were 50% less than the previous year reducing the Eden House annual allocation from $277,551 to $94,622. The proposed CDBG funds will help alleviate the reduction of PLHA funds. In addition, Eden House recently applied for $400,000 in Homeless Housing, Assistance and Prevention (HHAP) Round 5 and was not awarded any funding. Eden House as a transitional bridge housing project is unable to charge rents to collect ongoing revenue, such as permanent housing projects. As a result, Eden House is dependent on grant funding for ongoing operating costs. If insufficient grant funding is secured each year, the project is at risk of closing. Eden House also serves as an additional level of support in transitioning from homelessness to independent permanent housing. Eden House provides 24/7 on-site staffing and provides three meals a day. Eden House will also serve as an additional level of housing for those exiting the Navigation Center, that require additional supportive on-site services prior to entering permanent housing.

The PY 2024 CDBG Proposed Affordable Housing Projects are listed below and included in Table 3: PY 2024 CDBG Projected Affordable Housing.

• Habitat for Humanity (Habitat): Requested $125,000 and the NOFA committee recommends $50,000.

o Habitat applied for $50,000 to administer an Emergency Repair and Accessibility Program (ERAP) to provide at least 8 low-income owner-occupied households with necessary emergency and accessibility repairs and improvements, and $75,000 to administer a Senior Mobile Home Repair Program (SMHRP) to provide senior and/or disabled owner-occupied mobile homeowners with necessary repairs.

o The NOFA committee recommends awarding $50,000 to administer an Emergency Repair and Accessibility Program (ERAP) to provide at least 8 low-income owner-occupied households with necessary emergency and accessibility repairs and improvements.

• Self-Help Enterprises (SHE): Requested $75,000 and the NOFA committee recommends $75,000.

o SHE will administer a Senior Mobile Home Repair Program (SMHRP) to provide at least 3 senior and/or disabled owner-occupied mobile homeowners with necessary repairs including roof replace/replacement, accessibility improvements, floor repair/replacement, and energy efficient improvements.

o The SMHRP policies currently limit the per unit assistance at $11,500, Staff recommends effective immediately to increase the per unit cost from $11,500 per unit to $25,000 per unit to allow for additional mobile home repairs including roof repairs. The most sought-after repairs are roof repairs ranging from $20,000 to $25,000 per mobile home. This change will provide much needed assistance.

• Code-Enforcement: The NOFA committee recommends $175,000 to provide code enforcement inspections in CDBG eligible low-moderate income target areas to address substandard housing. This funding pays the full cost of one staff position which is responsible for code enforcement in CDBG Target Areas. A code enforcement staff person has been funded with CDBG annually for 25+ years. Code Enforcement activities were identified as an objective during the development of the 5-year Consolidated Plan. HUD requires consistent CDBG drawdowns to prevent becoming an at-risk CDBG grantee. Code Enforcement allows for consistent monthly CDBG drawdowns to remain in compliance with HUD CDBG regulations.

The PY 2024 CDBG proposed facility improvement projects are listed below and included in Table 4: PY 2024 CDBG Projected Facility Improvement Projects.

• Parks Improvements - Lincoln Oval Park: At $50,000 for park improvements at Lincoln Oval Park to complete the installation of wrought iron fence around the park and provide LED lighting. On April 20, 2020, Council approved $50,000 for park improvements in the current 5-year ConPlan.

• ADA Compliance Project - ADA Tree Wells (CP0618): At $450,000 for ADA Compliance Projects, which includes design and construction for tree well rehabilitation in the downtown area per the request of the Disability Advocacy Committee (DAC) in 2020, prior to its disbandment into the Citizens Advisory Committee. The current condition of the tree wells creates barriers to accessibility in the downtown area and this project is a high priority for Visalia’s disabled citizens. *Any increase or decrease of PY 2024 CDBG annual allocation or program income will be an adjustment to the ADA Compliance Project.

PY 2024 Proposed HOME Investment Partnership Program (HOME) Resources and Expenses:

The PY 2024 HOME projected resources include $540,000 in HOME estimated annual grant allocation, $100,000* in estimated program income, and $425,000 in prior year resources for a total of $1,065,000 as identified in Table 5: PY 2024 HOME Projected Resources. *HOME program income is normally generated from repayment of HOME funded first-time homebuyer or owner-occupied rehabilitation loans.

The PY 2024 Proposed HOME funding is listed below and included in Table 6: PY 2024 HOME Proposed Funding.

• HOME Administration: At $64,000 for PY 2024 HOME Admin and Planning. This amount is at the 10% allowed for administration of the HOME program by HUD.

• HOME CHDO Multi-Family Project Rancho Colegio: At $1,001,000 to HOME CHDO Multi-Family development project Rancho Colegio as approved by Council on August 7, 2023, and in the current 5-year ConPlan. As a HOME Participation Jurisdiction, the City is required to provide at least 15% of the annual HOME funds awarded to a Community Housing Development Organization (CHDO) to develop affordable housing. Self-Help Enterprises (SHE) is currently the only certified CHDO for the City of Visalia. The 15% CHDO set-aside has been combined with additional available HOME funds from FY 2023/24 and 2024/25 to provide for a CHDO multi-family project as specified in the current 5-year ConPlan. *Any increase or decrease of PY 2024 HOME annual allocation or program income will be an adjustment to the HOME CHDO Multi-Family project.

The PY 2019 Annual Action Plan Amendment IV:

The Program Year (PY) 2019 Annual Action Plan Amendment IV includes close out of the remaining $18,163 from $291,599 in CDBG CARES Act (CDBG-CV) reallocation funding (CDBG-CV RE) awarded to the City. In 2020, the CARES Act allocation was authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and

in 2020-2021, the City received a total of $1,507,850 in CDBG-CV rounds 1 and 3 funds that were used for a Food Assistance Program and a Subsistence Payment Program. The Subsistence Payment Program included COVID-19 rental, mortgage, and/or utility assistance. On June 14, 2022, the City was notified of an additional $291,599 in CDBG-CV reallocation funds to be used to prevent, prepare for, and respond to COVID-19. On August 1, 2022, Council adopted PY 2019 CDBG CARES Act (CDBG-CV) Annual Action Plan Amendment III for $291,599 in CDBG-CV RE funding to a COVID-19 Rental/Mortgage Assistance Payment Program.

On August 15, 2022, Council authorized the full CDBG-CV reallocation funds to be used for a Rental/Mortgage Assistance Program to provide low-to moderate-income working Visalia households at or below 80% of the area median income level that have been financially impacted as a direct result of the Coronavirus Pandemic within 6-months of assistance. On December 19, 2022, Council awarded RFP 22-23-25 to Self-Help Enterprises in $291,599 in CDBG-CV funds to administer a CDBG-CV Rental/Mortgage Assistance Program to working low-and moderate households impacted by the Coronavirus Pandemic for a contract term of January 1, 2023, through December 31, 2023. Assistance was set at $2,000 per working household for a maximum of 6 consecutive months and was expected to assist approximately 116 households.

A total of $273,435.94 of CDBG-CV reallocation funds were spent, and 111 households were served. As a result, $18,163.06 in CDBG-CV reallocation funds are remaining as shown in Table 7: CDBG-CV Reallocation Summary.

Self-Help Enterprises has completed this program and has declined the remaining $18,163.06 CDBG-CV reallocation balance. It was found to be very difficult to find eligible working households that met the program requirements including having a financial impact as a direct result of the COVID-19 pandemic. Therefore, staff is recommending transferring the remaining balance of $18,163.06 to City CDBG-CV administration, which is well under the allowed 20% administration cap at 6% of the grant allocation and shown in Table 8: PY 2019 CDBG-CV Annual Action Plan Amendment IV. City Council originally allocated 100% of CDBG-CV reallocation funds to administer the 2023 COVID-19 Rental/Mortgage Assistance program, with no funds contributing towards City administration costs, and thus far, the City has not used any CDBG-CV reallocation funding to cover the cost of administration for the 2023 CDBG-CV reallocation program. CDBG-CV funds can only be used to prevent, prepare for, and respond to COVID-19. Therefore, redirecting the small remaining CDBG-CV funds to a new COVID-19 respond program is not recommended.

Public Hearing for Adoption: Staff will return to Council with the final drafts of the PY 2024 Annual Action Plan, and PY 2019 CDBG-CV Action Plan Amendment IV on April 15, 2024, to hold a public hearing for adoption. This will include the comments provided by Council today, those received at the Citizens Advisory Committee (CAC) meeting on April 3, 2024, and all public comments received during the 30-day public review period commencing March 15, 2024, through April 15, 2024, including those received tonight, and at the April 15^th public hearing. The adopted PY 2024 Annual Action Plan must be submitted to HUD no later than May 15, 2024.

Fiscal Impact:

All expenditures proposed in this item will be funded with CDBG and HOME grant funds and no General Fund money is to be included. The final budgets for CDBG and HOME, as approved in the 2024 Action Plan and the accompanying amendment will be included in the final City budget document for informational purposes.

Prior Council Action: • April 20, 2020 - Adoption of the 5-year (2020/21 - 2024/25) Consolidated Plan. • August 1, 2022 - Council adopted PY 2019 CDBG CARES Act (CDBG-CV) Annual Action Plan Amendment III for $291,599 in CDBG-CV reallocation funding to a COVID Emergency Rental/Mortgage Assistance Payment Program. • December 19, 2022 - Council awarded RFP 22-23-25 to Self-Help Enterprises in $291,599 in CDBG-CV funds to administer a CDBG-CV Rental/Mortgage Assistance Program to working low-and moderate households impacted by the Coronavirus Pandemic. • August 7, 2024 - Council authorized re-certification of Self-Help Enterprises as a Community Housing Development Organization (CHDO) and a preliminary award letter for a commitment to Self-Help Enterprises for Rancho Colegio up to $1,290,000 in estimated HOME funding combined FY 23/24 $630,000 and FY 24/25 $660,000 contingent on actual HOME annual allocations and program income received.

Other: None

Alternatives: None

Recommended Motion (and Alternative Motions if expected):

recommendation

That Council review and comment on the Draft U.S. Department of Housing and Urban Development (HUD) Community Development Block Grant (CDBG) and HOME Investment Partnership Program (HOME) Program Year 2024 Annual Action Plan, 2019 CDBG CARES Act (CDBG-CV) Annual Action Plan Amendment IV and provide the opportunity for the public to comment.

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Environmental Assessment Status: N/A

CEQA Review: N/A

Attachments: • Attachment A: Draft 2024 Annual Action Plan • Attachment B: Draft 2024 AAP Table • Attachment C: Draft 2019 CDBG-CV Amendment IV • Attachment D: Draft 2024 AAP & 2019 CDBG-CV Amend IV PPT

Legislation Details