Attachment 11 - Report to Cupertino City CouncilCOMMUNITY DEVELOPMENT DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014 -3255
CUPERTINO TELEPHONE: (408)777- 3308•ww xupertino.org
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CITY COUNCIL STAFF REPORT
Meeting: April 1, 2014
Su�ect
Fiscal Year 2014 -15 allocations for Community Development Block Grant (CDBG)
Program, General Fund Human Service Grants (HSG) Program, Below Market -Rate
(BMR) Affordable Housing Fund (AHF) and CDBG Annual Action Plan (Action Plan).
Recommended Action
Conduct the first of two Public Hearings; and
1. Continue final approval of fiscal year 2014 -15 Community Development Block Grant
(CDBG) Program, General Fund Human Service Grants (HSG) Program, Below
Market -Rate (BMA) Affordable Housing Fund (AHF) funding allocations and
Community Development Block Grant (CDBG) Program Annual Action PIan to
April 15, 2014 to complete the 30 -day public review period as required by the United
States Department of Housing and Urban Development (HUD).
Description
This is the first of two required public hearings regarding the use of fiscal year 2014 -15
CDBG funds and the CDBG Annual Action Plan as required by HUD.
Discussion
A Request for Proposal (RFP) was issued on December 18, 2013 inviting applicants to
apply for grant funding for the upcoming fiscal year 2014 -15. The RFP deadline ended
on January 24, 2014. Immediately following the RFP deadline period the Housing
Commission began their initial rating and ranking of grant applications at their regular
meeting held on February 13, 2014. At the February 13, 2014 Housing Commission
meeting each applicant was provided an opportunity to present their application to the
Housing Commission. In addition a special Housing Commission meeting was held on
February 24, 2014 in order for the Housing Commission to finalize their grant
application funding recommendations to the City Council.
During the Housing Commission rating and ranking meetings in February 2014 the
City of Cupertino was estimating a fiscal year 2014 -15 CDBG entitlement grant amount
of $330,000. Attachment C provides a fiscal year 2014 -15 grant application summary
including the Housing Commission's CDBG, HSG and BMR AHF funding
ATTACHMENT 1 1
Page 2 of 6 2014 -15 Allocations for CDBG, HSG, BW AHF and CDBG Annual Action Plan April 1, 2014
recommendations to City Council and is based on the estimated CDBG entitled grant
amount of $330,000. On March 19, 2014 the City of Cupertino was notified that the
estimated fiscal year 2014 -15 entitlement amount will be $310,943. Due to the difference
in CDBG funding, Attachment B provides the adjusted fiscal year 2014 -15 grant funding
recommendations based on the final CDBG entitlement amount of $310,943. The
agencies on the recommended funding list have been informed of the revised grant
amount.
In February 2008, the City Council voted to move to a two -year funding cycle for public
services to reduce the amount of time non - profit agencies spend preparing applications
for funding. However annual public hearings are still required by HUD to review the
CDBG Action Plan and finalize CDBG allocations. Fiscal Year 2014 -15 will be year one
of a two-year funding cycle for awarded CDBG public service grant applications, HSG
grant applications and BMR AHF grant applications. Agencies who are awarded in
fiscal year 2014 -15 and who remain in good standing will receive a one year contract
amendment for fiscal year 2015 -16. CDBG capital housing project applications will
remain on a one year funding cycle. The City of Cupertino is obligated per HUD to
have two CDBG public hearings each year to review funding and review the Action
Plan.
Community Development Block Grant (CDBG) Program
Fiscal year 2014 -15 will be the City of Cupertino's twelfth year as an entitlement
jurisdiction receiving a CDBG grant directly from HUD. HUD regulations require that
eligible housing activities selected for funding must benefit very low and low- income
households or eliminate a blighted area or address an urgent (emergency) community
need and must also meet a national objective. In addition, only certain types of eligible
activities qualify under the CDBG regulations. Examples of eligible activities are:
• Public improvements
Public service activities
• Affordable housing developments
• Property acquisition for affordable housing
• Rehabilitation of affordable units
As a result, of the changes to the CDBG entitlement funding for fiscal year 2014 -15, the
City of Cupertino estimates it will have a total of up to $820,943 in CDBG funds eligible
to allocate. The estimated total of $820,943 in CDBG funds for fiscal year 2014 -15
includes the 2014 -15 entitlement amount of $310,943, $10,000 program income (PI)
generated from loan repayments, and $500,000 of available uncommitted funds from
the prior fiscal year 2013 -14. The funding sub - categories in the CDBG funds include:
Administrative Funds
CDBG administrative funds cannot exceed 20% of the estimated 2014 -15 entitlement
amount ($310,943) and PI ($10,000). Therefore, an estimated total of $64,188 is proposed
Page 3 of 6 2014 -15 Allocations for CDBG, HSG, BMR AHF and CDBG Annual Action Plan April 1, 2014
to be allocated for administrate costs to cover salary and benefits for staff, who assist
with the operation of the CDBG program.
Public Service Funds
CDBG public service funds cannot exceed 15% of the 2014 -15 entitlement amount
($310,943) and PI ($10,000). Therefore, an estimated amount of $48,141 is proposed to be
allocated toward eligible public service activities. Eligible public service activities must
benefit low- income households. Examples of eligible public service activities can
include childcare, emergency services, fair housing services and senior legal services.
CDBG Capital Housing Projects
The remainder of the 2014 -15 CDBG entitlement grant funds (65 %) or $208,612 is
available to be allocated toward eligible CDBG capital housing projects. Also for fiscal
year 2014 -15, an estimated $500,000 of uncommitted funds from the prior fiscal year
2013 -14 is available to be allocated for eligible CDBG capital housing projects, thereby
increasing the total amount available to be allocated for eligible CDBG capital housing
projects to $708,612. Based on fiscal year 2014 -15 Housing Commission CDBC capital
housing project funding recommendations, $557,000 out of $708,612 available is
recommending for funding. During the course of fiscal year 2014 -15 staff will continue
to seek opportunities to expend the remaining $151,612 of available CDBG capital
housing project funds. Eligible CDBG project activities can include purchase of land for
affordable housing, rehabilitation of qualifying units, construction of affordable units
and public improvements in low- income neighborhoods.
General Fund Human Service Grants (HSG)
For a number of years the City Council has appropriated approximately $40,000 from
the General Fund to fund human service agencies. Formal agreements and monitoring
are required for this program, but the requirements are less stringent than for federal
funding. The Housing Commission reviews HSG applications at the same time as the
CDBG applications and makes funding recommendations to the City Council. If the
Council reduces or increases HSG funding for fiscal year 2014 -15, HSG grant applicant
amounts will be reduced or increased proportionately.
Below Market -Rate (BMR) Affordable Housing Fund (AHF)
The Below Market -Rate (BMR) Affordable Housing Fund (AHF) receives its revenue
from the payment of housing mitigation fees from office, commercial, industrial and
residential development. The Housing Commission reviews BMR AHF applications at
the same time as the CDBG applications and makes funding recommendations to the
City Council.
Charities Housing —19935 Price Avenue
This year a new grantee, Charities Housing, has requested funding in the amount of
$125,817.50 to fund acquisition and operations of 19935 Price Avenue for a period of 15
Page 4 of 6 2014 -15 Allocations for CDBG, HSG, BMR AHF and CDBG Annual Action Plan April 1, 2014
years. The City originally provided both CDBG and Affordable Housing Fund (AHF)
grants and loans for a total of approx. $1,662,210.70 for acquisition and rehab to Senior
Housing Solutions (SHS) for the property on Price Avenue. The Price Avenue property
is a 5- bedroom residential dwelling unit providing very low- income rental units to five
seniors. Charities Housing, another local non -profit housing organization, is proposing
to acquire SHS, which would include acquiring their properties and outstanding
loans /debts.
Charities Housing is requesting a total financial subsidy from the City of Cupertino
the amount of $251,635 which equates over the next two year funding cycle ( Y ear
2014 -15 and fiscal year 2015 -16) to $125,817.50 per year. Charities Housing is flexible in
receiving $125,817.50 per year over the next two fiscal years. Attachment D provides a
detailed description of the property and the funding request. If Charities Housing is
awarded they will acquire the 19935 Price Avenue home from SHS and assume all of
the existing grant and loan obligations. Charities Housing would also perform all
property management functions going forward.
The 19935 Price Avenue home provides much needed rental senior housing to
extremely low- income households in Cupertino. The City's 2007 -2014 Housing Element
and CDBG Consolidated Plan identify extremely low- income and senior housing as a
high priority. If the City of Cupertino decides not to subsidize Charities Housing there
is a possibility that the property could be resold and there may not be enough equity in
the property to pay off all existing obligations. The City will also have 'to review and
implement other methods of achieving goals to house extremely low- income
households. The Housing Commission recommended funding this request.
Below is a summary of adjusted fiscal year 2014 -15 CDBG, HSG and BMR AHF funding
recommendations based off an estimated CDBG entitlement amount of $310,943.
Details including full grant descriptions are included in Attachment F.
Adjusted Fiscal Year 2014/15
No. Grant Application Summary
(Based off FY 2014f13 FAL $310,943 CDBG Bnt't1MMt AMM22
CDBG Public Service Applications:
1 (Two -Year Funding Cycle)
Eden Council for Hope and Opportunity - Fair Housing
a^ - ----
b Live Oak Adult Da Services - Senior Adult Da Care
West Valley Community Services - Community Access to
c Resource and Education (CARE)
Faith In Action Silicon Valley Rotating Shelter - Rotating
d Shelter Program
Adjusted FY 2014/15
Housing Commission
Funding
Page 5 of 6 2014 -15 Allocations for CDBG, HSG, BRIR AHF and CDBG Annual Action Plan April 1, 2014
Next Steps
As mentioned earlier, this is the first of two required public hearings regarding the use
of fiscal year 2014 -15 CDBG funds and the CDBG Annual Action Plan as required by
HUD. The second Council hearing for the final approval of fiscal year 2014 - 2015
Adjusted FY 2014lI5
No.
Adjusted Fiscal Year 2014/15
Housing Commission
Grant Application Summary
Funding
(Bssed off FY 2014/15 EsL $310,943 CDBG Entitlement Amooat)
Recommendations
CDBG Capital/Housing Project Applications:
2
(One -Year Funding Cycle)
Rebuilding Together Silicon Valley - Housing Repair and
a
Rehabilitation Program
$ 57,000.00
b
Habitat for Human - Home Repair Program
$ -
Cupertino Communty Housing For The Disabled, Inc. - Le
c
Beaulieu Rehabilitation
$ 500,000.00
Sub -Total
55700000
CDBG Program Administration:
3
(One -Year Funding Cycle)
a
Administration
$ 64,188.00
Sub -Total
$ ir4 i8 &00
General Fund Human Service Grants (HSG) Applications:
4
(Two -Year Funding Cycle)
Catholic Charities of Santa Clara County - Long -Term Care
a
Ombudsman
$ 6,500.00
b
Maitri - MTH Direct Client Services
$ 12,000.00
c
Senior Adults Legal Assistance - Legal Assistance to Elders
$ 9,800.00
d
Faith In Action Rotating Shelter - Job Development Program
$ 7,700.00
e
United Way of Silicon Valle - 211 Santa Clara County
$ 4,000.00
Sub -Total
x 40,000A0
5
Below Market -Rate (BMR) Affordable Housing Fund (Al-IF)
Ap licaflons (Two-year Funding Cycle):
a
West Valley Community Services - Affordable Placement
Program
$ 109,000.00
b
Project Sentinel - Landlord/Tenant Rental Mediation
$ 30,000.00
c
Charities Housing -19935 Price Avenue
Acquisition and Rental Subsidy
$ 125,817.50
- .. ...
Sub -Total ;
$ 264,81250
TOTAL z. ' ,
$ 974,13650
Next Steps
As mentioned earlier, this is the first of two required public hearings regarding the use
of fiscal year 2014 -15 CDBG funds and the CDBG Annual Action Plan as required by
HUD. The second Council hearing for the final approval of fiscal year 2014 - 2015
Page 6 of 6 2014 -15 Allocations for CDBG, HSG, MM AI-IF and CDBG Annual Action Plan April 1, 2014
CDBG, HSG and BMR AHF funding allocations and Action Plan to complete the 30 -day
CDBG Action Plan review period is scheduled on April 15, 2014.
Prepared by: Christopher "C.J." Valenzuela, Senior Housing Planner
Review Ted by: Aarti Shrivastava, Director of Community Development
Approved for Submission by: David Brandt, City Manager
Attachments:
A. Draft Resolution
B. Adjusted Fiscal Year 2014 -15 Grant Application Funding Summary
C. Fiscal Year 2014 -15 Grant Application Funding Summary
D. Fiscal Year 2014 -15 Draft CDBG Annual Action Plan
E. Description of Charities Housing Funding Request -19935 Price Avenue
F. Fiscal Year 2014 -15 Housing Commission Funding Recommendation Grant
Descriptions
Page 1 of 2 2014 -15 Allocations for CDBG, HSC, BMR AHF and CDBG Annual Action Plan April 1, 2014
Description of Charities Housing Funding Request —19935 Price Avenue
Included in the fiscal year 2014 -15 BMR AHF funding recommendations from the
Housing Commission to the City Council is the affordable housing property located at
19935 Price Avenue. In 2009, Senior Housing Solutions, Inc. (SHS) a Iocal non -profit
housing organization acquired and managed an affordable housing property located at
19935 Price Avenue, Cupertino, CA 95014 with assistance from the City of Cupertino
and Housing Trust of Santa Clara County ( HTSCC). The City of Cupertino provided a
combination of loans and grants for acquisition and rehabilitation from two funding
sources which included the Community Development Block Grant (CDBG) Program
and Below Market -Rate (BMR) Affordable Housing Fund (AHF). Between loans and
grants the City of Cupertino provided a total of $1,662,210.70 to SHS toward the Price
Avenue home. The HTSCC also provided an additional $100,000 loan to SHS. See table
below which provides a summary of all loans and grants for 19935 Price Avenue.
Charities Mash p
Portk6c Analysis for
Senor housing Solutims a Prcjerd Match Im
Deed of Trust Start Maturity
The Price Avenue home is a five - bedroom, three -bath, single family residential (SFR)
dwelling unit currently being rented to extremely low- income seniors. The HTSCC has
a provision in their loan agreement with SHS that the property must be rented to
extremely low- income households. There are no project based or individual tenant
based Section 8 Housing Vouchers associated with this property and therefore the
property is currently running ring at a deficit. The Section 8 Housing Voucher program
provides rental assistance to low- income households. In Santa Clara County, the
Housing Authority of the County of Santa Clara County administers the Section 8
Housing Voucher Program. A low- income household pays about a third of its income in
rent to the landlord, and the Housing Authority of the County of Santa Clara County
pays the rest of the rent up to a certain limit directly to the landlord.
In 2013, Charities Housing another local non - profit housing organization notified the
City of Cupertino that SHS was experiencing financial hardship as an organization and
Page 2 of 2 2014 -15 Allocations for CDBG, HSG, BMR AHF and CDBG Annual Action Plan April 1, 2014
Charities Housing is considering acquiring a total of eleven SHS properties in six
different cities along with SHS financial obligations. Charities Housing is in the process
of conducting a financial assessment of all SHS properties and financial obligations
which includes the property in Cupertino located at 19935 Price Avenue. Upon
Charities Housing conducting a physical needs assessment and financial assessment of
19935 Price Avenue property they have identified that the property is currently
operating at a financial deficit and needs additional operating reserves, maintenance
and repairs. Therefore, Charities Housing is requesting a total financial subsidy from
the City of Cupertino in the amount of $251,635 which equates over the next two year
funding cycle (fiscal year 2014 -15 and fiscal year 2015 -16) to $125,817.50 per year.
Charities Housing is flexible in receiving $125,817.50 per year over the next two fiscal
years.
The $251,635 of total financial subsidy would include one -time upfront costs in the
amount of $33,665 associated with the acquisition of the property from SHS and also
include an additional $217,970 which would provide fifteen years of financial operating
subsidy and reserves to ensure that the property remains in its current use. This item
was also taken to the Housing Commission on both February 13, 2014 and February 24,
2014. The Housing Commission has recommended that the City Council fund Charities
Housing in the amount of $251,635 or $125,817.50 per year over the next two year
funding cycle. The current estimated balance of the BMR AHF is approximately
$5,700,000. If Charities Housing is awarded they will acquire the 19935 Price Avenue
home from SHS and assume all of the existing grant and loan obligations. Charities
Housing would also perform all property management functions going forward.
The 19935 Price Avenue home provides much needed rental senior housing to
extremely low -income households in Cupertino. The City's 2007 -2014 Housing Element
and CDBG Consolidated Plan identify extremely low -income and senior housing as a
high priority. If the City of Cupertino decades not to subsidize Charities Housing there
is a possibility that the property could be resold and there may not be enough equity in
the property to pay off all existing obligations. The City will also have to review and
implement other methods of achieving goals to house extremely low- income
households.