HomeMy WebLinkAbout1990-05-01; City Council; 10618; Project Selection for Federal Entitlement Funds 16th Year Community Development Block Grant CDBG Program� A �
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AB# 1—e % TITLE: PROJECT SELECTION FOR FEDERAL
MTG. 05/01/90 ENTITLEMENT FUNDS
DEPT.RED (16TH YEAR CDBG PROGRAM)
RECOMMENDED ACTION:
DEPT. HI
CITY A71
CITY MG
If the City Council concurs, your action is to adopt Resolution
No. 9.4/39, to select and approve projects to be financed with
Entitlement funds to be received in the 16th Year of the Federal
Community Development Block Grant Program. Also, the resolution
authorizes the City Manager to submit the City's final statement
of proposed projects to the federal Department of Housing and
Urban Development for approval.
ITEM EXPLANATION:
The City is entering into the 16th year of participation in the
federal Community Development Block Grant (CDBG) Program. This
is the third year that the City of Carlsbad has participated
directly with the Department of Housing and Urban Development as
an Entitlement City. For Program Year 1990-91, it is estimated
that the City will receive $308,160 to finance projects to
benefit low/moderate income persons.
In order to gather input from the public as to how the City's
federal CDBG funds should be spent in Carlsbad, staff held public
meetings on January 11, 1990 and January 16, 1990. Staff also
requested proposals from city departments, committees and
commissions, and various non-profit community organizations.
As a result of the public meetings and the various requests for
proposals, the City received a total of fifteen (15) proposals to
be funded with CDBG monies; fourteen (14) of the proposals were
eligible for funding. The total amount of funds requested for
eligible proposal:, is $1,492,204; $94,203 of the requested funds
are for public/social service activities and $1,398,001 are for
Public facility/improvement/property acquisition projects.
At their March 5, 1990 meeting, the Housing and Redevelopment
Advisory Committee reviewed the eligible projects/proposals and
made their recommendations for funding based on the City's
"Strategy for the Community Development Block Grant Program" and
the proposal "selection criteria." The selection criteria and
CDBG Program Stra-,,egy are outlined in Exhibit 3 for informational
purposes. In addition to considering the noted selection criteria
and program strategy in making their recommendations, HRAC was
also required to consider applicable federal regulations limiting
the amount of funds expended on public service projects to 15%
($46,224) of the total grant and on program ?dministration to 20%
($61,632) of the total grant.
AGENDA BILL NO. /d,1,1f
PAGE 2
A complete list of the projects proposes.! for CDBG funding in
Program Year 1990-91 and funding recommendations
made by the
Housing and Redevelopment Advisory Committee are provided in
=
Exhibit 2 for City Council consiaeration. Based on the selection
guidelines noted above, HRAC
recommended either full funding,
partial funding or no funding for each of the eligible
proposals
submitted to the City.
'
x4;
As noted in Exhibit 2, the North County Housing Foundation
submitted
a proposal for CDBG funding, in the amount of $399,001,
to purchase property for a housingproject
which will include a
total of six (6) rental units and a Head Start Preschool facility
to
accommodate thirty
y (30) children; the rental units will be
located above the
preschool. The Foundation is also requesting an
additional $293,226 in Redevelopment 20% Housing Set
-Aside funds
to complete the project. Therefore, the total request for
funding from
the City of Carlsbad is $692,227 (CDBG + Set -aside).
At the request of the Housing Task Force,
an analysis of the
North County Housing Foundation's Proposed Project was completed
by Keyser Marston
Associates, Inc. The Task Force was concerned
that the project may be too costly for the
number of housing
units actually gained through completion of the project.
According to the analysis submitted by Keyser Marston Associates,
the Foundation's housing
project could be completed at a total
cost of $882,291 rather than the proposed $1,085,029; the
difference in cost estimates is $202,726. If the Council
approver the housing project proposed by the Foundation, the
analysis indicates that the City
should contribute no more than a
total of $489,500 in CDBG and/or Set -aside funds (rather than the
requested $692,227) to the project.
While the creation of affordable housing by the private sector is
fully encouraged and
supported, staff feels that there is a
pressing need to maximize the funding available to
create a
greater number of units than six (6). If Council wishes, they
may
recommend that the $77,304 in 16th Year CDBG funds requested
by the Foundation combined with the
Redevelopment 20% Housing
Set -aside fund be applied to a project(s) that would
create a
higher number of housing units and assist more families.
Likewise, future
years CDBG funds that the Foundation is
requesting may also be allocated to the creation of housing to
benefit low/moderate persons. The Housing Task Force is
currently looking into ways to leverage the available City
resources to develop and/or assist with the creation of
low/moderate income
housing. Council may direct staff to return
with a project that creates more units by combining the
aside and CDBG funds. 20% Set -
The consultant also analyzed the request for Redevelopment 20%
Housing Set -aside funds for
the Foundation's proposed Head Start
Preschool. The analysis showed that the preschool
as proposed
AGENDA BILL NO. A* G/8
PAGE 3
would not meet State licensing requirement. Based on information
from the two non-profit agencies
currently operating Head Start
Programs in San Diego County, a sixty (60) child
be
facility would
more appropriate and cost effective for Carlsbad.
In order to submit an application to the U.S. Department of HUD
for the CDBG funding, the City Council
must select and formally
approve the projects to be included in the
City,s 1990-91
program. The Council must also designate the funding level for
each selected project.To
f>
further assist the Council in its
decision, staff has attached
a report, as Exhibit 4, which
provides more detailed information related
to HRAC's
recommendations and applicable federal regulations.
The City must submit its application for CDBG funds to the Los
Angeles HUD office no later
than June 1, 1y90.
FISCAL IMPACT:
The City of Carlsbad will receive an estimated total of $308,160
in CDBG funds for program year 1990-91. The City may use a
maximum of twenty percent (20%) of the total available funds, or
$61,632 for administration. If Council a
Of $61,632
for administration, the City will have $246,528stosfund selected
projects. A maximum of fifteen (15%) of the total funds, or
$46,224, may be used to finance public services. If a d
by
HUD, the funds will be made available to the City afterpJuly1,
1990.
EXHIBITS:
1 - Resolution No. 9:3 selecting projects for CDBG funding
and authorizing the City Manager to submit a final
statement to the Department of HUD for approval.
2 -✓ Summary of Eligible and Ineligible Projects proposed for
CDBG funding and Recommendations made by Housing and
Redevelopment Advisory Committee.
3 - ✓ Strategy for Community Development Block Grant Program and
Selection Criteria.
4 - $"" Staff Report to City Council dated April 16, 1990 with
attachments.
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RESOLUTION NO. 90-139
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, SELECTING SPECIFIC PROJECTS FOR
FUNDING UNDER THE 16TH YEAR COMMUNITY DEVELOPMENT BLOCK
GRANT PROGRAM.
WHEREAS, the City Council of the City of Carlsbad,
California, on May 8, 1990, considered the City's Sixteenth
Year Block Grant Application; and
WHEREAS, the City Council has taken all testimony into
account.
NOW, THEREFORE, BE IT RESOLVED as follows:
1. That the above recitation are true and correct.
2. That the projects selected at the City Council meeting
of May 8, 1990, are hereby apprcved for inclusion in
Carlsbad's Sixteenth Year Community Development Block
Grant Final Statement for federal funding.
3. That the City will publish a summary of the proposed
Projects in the local newspaper(s) and allow a fifteen
(15) day public review and comment period prior to
submitting the City's Final Statement to the United
States Department of Housing and Urban Development for
approval.
4. That the City Manager is authorized to submit the Final
Statement to the U.S Department of Housing and Urban
Development for approval upon expiration of the public
review and comment period.
PASSED, APPROVED AND ADOPTED, by the City Council of
the City of Carlsbad, California on the 8th day of May,
1990, by the following vote, to wit:
AYES: Council Members Lewis, Kulchin, Mamaux and Larson
NOES: None
ABSTAIN: None
ABSENT: Council Member Pettine
ATTEST:
CL UDE A. L WIS, MAYOR
ALETNA L. RAUTENKRANZ, City C1 rk
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EXHIBIT 3
CITY OF CARLSBAD
STRATEGY FOR THE
COMMUNITY DEVELOPMENT BLOCK GRANT
PROGRAM
AND
PROPOSAL SELECTION CRITERIA
;3
STRATEGY:
s
'
The City of Carlsbad is
committed to using CDBG funds to enhance
=
both the physical environment
of the City and to assist low- and
A
moderate -income residents
of the City. To achieve these goals,
the CDBG funds shall be
directed to meet one of three basic
priorities:
1. To provide decent,
safe and sanitary housing principally for
persons of low- and
moderate -income.
2. To provide funds to
revitalize and improve the physical
aspects of the City
through capital improvement projects.
3. To provide services
through community based organizations
that serve needs of
citizens principally of low- and
moderate -income.
SELECTION CRITERIA:
Proposals will be ranked
by the Housing and Redevelopment
Advisory Committee according to how well they address the
following criteria:
i I. Completeness of proposal.
2. Responsiveness to the Strategy (note above).
3. Availability of matching funds.
' 4. Promoting goals of the 10 ��• year Housing Plan.
t
.3
b,
EXHIBIT 4
April 16, 1990
TO: CITY COUNCIL
FROM: Acting Director of Housing and Redevelopment
STAFF REPORT ON 16TH YEAR COMMUNITY DEVELOPMENT
BLOCK GRANT PROGRAM
To assist the City Council in selecting and approving the
projects to be included in Carlsbad's 16th Year Community
Development Block Grant Program, staff has prepared this report
to provide additional information which should c: considered
during the decision -making process,
PROGRAM OBJECTIVE:
The primary objective of the federal Community Development Block
Grant (CDBG) Program is the development of viable urban
communities through the provision of decent housing, a suitable
living environment and through expansion of economic
opportunities. Program expenditures are to be used to fund
s projects/programs which principally benefit low and moderate
income persons. The funds approved by the federal government for
this program provide cities with the opportunity
projects which often are not underteto finance
constraints of a regular citypbudgete under the normal
HOUSING AND REDEVELOPMENT ADVISORY COMMITTEE RECOMMENDATIONS:
The Housing and Redevelopment Advisory Committee (HRAC) made its
recommendations based on -n estimate of the amount of federal
funds to be received by the City for the 1990-91 Community
Development Block Grant Program. It is estimated that the City
of Carlsbad will receive a total of $308,160 in CDBG funds. It
is possible, however, that the City may receive more funds than
i originally estimated by the U.S. Department of HUD. Staff
anticipates that the Department of HUD will forward official
notification to the City, by the end of May, as to the final
approved allocation for Carlsbad.
If additional funds are received, HRAC recommended that they
first be allocated to the Good Samaritan House up to their
original request of $14,000 and, then, divided among the
remaining recommended projects which did not receive an
allocation equal to the original request, If HRAC
recommendations are accepted and additional CDBG funds are
received after the public hearing on May 1, 1990, it is
respectfully requested that the City Council authorize staff to
allocate the funds as stated by HRAC with the understanding that
the City must remain within the program guidelines for
expenditures on public service projects and administration.
City Council
16th Year Community Development Block Grant
April 16, 1990
PAGE 2
The federal program regulations state that no more than fifteen
percent (15%) of the total CDBG funds allocated to the City may
be used for "public service" projects and no more than twenty
Percent (20%) for the funds may be used for administration of the
program. If the Council so desires, any excess CDBG funds, up to
ten percent (10%) of the total allocation, may be allocated to an
"unprogrammed funds" account for use on approved projects which
exceed the estimated cost of completion. For example, if the
Council approves construction of a public facility, "unprogrammed
funds" may be used to cover change orders which are necessary to
complete the project.
In reference to the "additional recommendations" for the North
County Housing Foundation, it is staff's understanding that
HRAC's recommendation to Council is to entirely fund the purchase
of the property for the housing project in program year 1990-91.
To implement HRAC's recommendation, the City may borrow against
the future CDBG allocations through HUD's Section 108 Loan
Program. To participate in the program, which is explained in
further detail in Attachment A to this report, the City must
submit a loan application; processing fees and interest are
charged to the loan.
ACTION REQUIRED BY CITY COUNCIL:
The following options are open to the City Council in approving
the projects (and funding levels) to be included in the City's
1990-91 Community Development Block Grant Program:
1. Approve the recommendations submitted by the Housing and
Redevelopment Advisory Committee. If the recommendations
are accepted as submitted, the Council must also
approve/disapprove preparation of the Section 108 Loan
Application, by staff, for the North County Housing
Foundation Project.
2. Approve the recommendations submitted by the Housing and
Redevelopment Advisory Committee with modifications.
3. Disregard the recommendations submitted by the Housing and
Redevelopment Advisory Committee and select alternate
projects with new funding levels.
T; City Council
16th Year Community Development Block Grant
April 16, 1990
PAGE 3
Upon Council approval of selected projects and funding levels,
staff will prepare a 'Draft Proposal of Projects" for publication
in the local newspaper and an hispanic newspaper. Publication of
� public rc���,iew and
the Draft Proposal initiates a fifteen (15) day p
=;Rcomment period. Upon expiration of the public review and comment
;# period, staff will forward all comments received from the public
to the City Council for review and consideration prior to final
{: preparation of Carlsbad's application for CDBG funding. If the
' City receives no public comments on the Draft Proposal, staff
will prepare the appropriate application and submit it to the U.S
Department of HUD for further processing. The application is due
to HUD by June 1, 1990.
K
PATRICIA A. CRATTY
PAC: DF:aI
COMMUNITY
UNITED
PROGRAM SUMMARY:
CITY OF CARLSBAD
DEVELOPMENT BLOCK GRANT
SIXTEENTH PROGRAM YEAR
STATES GUARANTEED LOAN
SECTION 108 SUMMARY
ATTACHMENT A
PROGRAM
PROGRAM
The U.S. Department of Housing and Urban Development offers low
interest, guaranteed loans for entitlement communities for
various types of development projects. Highest priority must be
given to projects that benefit low- and moderate -income people.
As capital sources, such as federal aid and tax-exempt bonds,
h
have become scarcer for local communities, many administrators
have turned to Section 108 loans as a sound financing
alternative. Section 108 financing is ideal forccommuWi hen sixwit
immediate needs. Most loan applications are approved
weeks,
scheduleRepayment
that bestconvenient
thecommunities
requireoate a
requirements repayment
re
the specific project.
Any entitlement city may apply for a loan up to three times the
amount of its current Community Development Block Grant. If an
entitlement city's application for a Section 108 loan is
approved, the City must pledge its current and future CDBG funds
as security. In some cases, HUD may also require additional
security. HUD provides guarantees for all Section 108 debt,
backed by the full faith and credit of the United States
government.
After HUD has approved loan applications in the amount of $50 to
b dled together by a private
$70 million, the loans are un
underwriter i�,,to securities and resold as serial amortizing notes
to private iroestors. Proceeda from the sale of these notes are
distributed to the borrowing communities, which may receive the
funds directly or designate a public agency to receive them.
Beside the principal amount of the loan, communities pay interest
costs and an application processing fee. The interest rate is
determined by the market at the time the notes are sold. The
application fee is approximately $1700. The only other expense is
an "issuance" cost shared among all borrowers.
In most circumstances, guaranteed loans must be repaid within six
(6) years.
l2,
s
APPLICATION PROCESS:
An application for a Section 108 loan may be submitted at any
time. The same resubmission requirements required for CDBG
funding applications must be adhered to in submitting an
application for the Section 108 loan. To save time and money, the
City can submit the Section 108 loan application with the CDBG
application due by June 1 of each year.
The loan application must include a statement of the City's
community development objectives, a breakdown of the projected
uses of the Section 108 loan funds and a schedule for repayment
of the loan. The schedule must identify the sources of repayment.
In addition, the City should provide a certification of the
City's authority to pledge CDBG funds as security and statements
showing that the proposed project has undergone citizen review.
HUD may also require other certifications, such as statements
showing that the City has made good -faith efforts to obtain
financing without the fiiaeral guarantee.